The Settler and his Felda will soon part( Part 1)

This is an amended version of the current article. I am thankful to some readers for pointing out my mistakes. 

I think one reader misread what I have said in my previous article. At listing, it’s not going to be RM 4000/share. Its going to be between RM 3-4 per share. At RM4.65 with about 810 shares each, the FELDA settler in order to get another windfall of near to RM 4000, will need a premium of RM 4 over his cost. His cost per share is indeed RM 4.65 x 810. RM3766.50. RM200 processing fee. 

The opening price will then have to be around RM8.65. I don't know whether that is possible. The government can persuade some big boys to play the market to push up the counter. I think that is the strategy they will use.  So, the remark by one reader that the government has an ace up their sleeves will turn out prescient.

For the settlers, all they get is RM 15,000 + maybe RM 3000-4000. That’s all. So, the RM 15,000 teaser is prepayment to the paltry sum they get. So they jump up and down at their own stupidity. Others not at all related to FELDA are jumping higher and they don’t have to assemble before PM to listen to his self-righteous lecture on how the BN government has given and done so much for the rakyat and then have some of your brethren berated as haramjadah. 

The majority of FELDA settlers are sane people. Probably those who jumped up and down at the FELDA gathering in Jengka a few weeks ago were the UMNO members who are also FELDA settlers. The majority must now be asking- have we been suckered? 

But the reader was also right. At RM 200 processing fee, the underwriting banks get over RM 22 million. Hurrah! They are all grinning like a Cheshire cat. 

From the 2.18 billion shares offered for sale, FELDA community (settlers and employees) get 200.6 million shares or 5.5%. That’s only 5.5% having the opportunity to make as much money as those 94.5% non FELDA people as a whole and individually, making more money than FELDA rednecks. Having done that, we then engage in the usual supercilious talk down  of why are others envious at some FELDA folks making a bit extra or that why shouldn’t Malays also make money from the stock market? 

Look at the numbers and don’t fudge the issue by going into the race thing. 5.5% against 94.5%. The 94.5% people are making money as a result of those folks using the long poles to harvest palm fruits. Who’s zooming who? Even a small child can understand that FELDA and FELDA people have been suckered into thinking they can make money. Others are making money. Banks are making money. New people recommended by Boston Consulting, Hay Group and others get employed and will be paid gargantuan salaries. 

Don’t just look at the superficialities. One reader suggested that we look at the technicalities of the listing. We have news for this techno freak- technicalities don’t make money for you. The fundamentals of the business do. The price of CPO is trending down. 

Look at the business plans? What are the earth shattering breakthroughs that can earn quantum leap profits? The first thing they do or have done was to engage consulting groups look for the so called first rate talents. After operating for 56 years, FELDA hasn’t been able to cultivate the foremost specialists in the business? You have to scour the human resource market and pay consulting groups like Hay Group and Aon Hewitt and Boston Consulting to look for people and lecture you on organizational engineering? 

Going through the motion of tweaking the human capital component makes you think, FGV will make money for the FELDA folks. After operating for 56 years, you need others to tell you some business units have to be divested and some collapsed into departments?  You do everything but accomplish nothing. Hey- that reminds me of the same description given by a former senior minister on Najib. The hardest working PM- is a term coined by PM Najib’s publicity people. But actually, says the former senior minister- Najib does everything but accomplishes nothing. Motion is no substitute for substance. 

Look further. How will it earn profits and increase revenues? FGV goes into buying more land overseas to increase acreage. What is this business? This is the upstream business – a business which has been done successfully by FELDA Holdings through FELDA Plantations and FELDA Palm Industries. FGV is doing the same thing which FELDA Holdings have been doing better than the FGV overseas venture in the downstream businesses and non-synergized businesses. You are paying good money to get other people do the same thing you have doing successfully. 

FELDA will keep 40% of the shares. It’s selling just 60%.  Who is keeping score of the 40%? FELDA or with some vehicles created by Cikgu Isa? I hear, those shares will be held in trust by a vehicle- FELDA Asset Holdings Corporation( FAHC) – I hope it will not turn out to be farcical. This is a strange creature isn’t it? It’s created as a trust fund, managing the 40% shares held by FELDA. FELDA says it will allocate 20% of the shares of FGV or 50% in FAHC in exchange for the 51% share KPF has in FELDA Holdings. That means, the 40% share will be divided 50:50. 

So, the peneroka through the emasculated KPF will have 50% in FAHC- an intermediary. Not directly in FGV. So, each year FGV distributes dividends to FAHC being holder of 40% of FGV shares and FAHC in turn distributes dividends to KPF who holds 50% in FAHC. The quantum of the dividends will be determined by FAHC. So the peneroka better pray hard, solat hajat and qiamulail( night prayers the devout among the Muslims perform) - that the dividends can match the 15% they are getting now. 

If they don’t get 15%, maybe they should all camp outside Isa or Najib’s house to perform the butt dance.