Commodities trader Louis Dreyfus is buying a smaller-than-anticipated slice of Malaysian palm oil firm Felda Global Ventures Holding's (FGVH.KL) $3.1 billion IPO but sealed a deal to market the company's palm oil.
Louis Dreyfus will take up a 0.5 percent stake in what will be the world's second-largest IPO this year after Facebook (FB.O), sources with direct knowledge of the deal told Reuters, after a week of speculation that the commodity trader was reconsidering an investment.
The Rotterdam-headquartered company had previously considered buying up to 2.5 percent in Felda, the world's third-largest palm oil company by acreage, as part of cementing two strategic partnerships between the firms in refining and logistics.
"In acknowledgment of the strong result of the bookbuilding and demand for the FGVH offering, Louis Dreyfus Commodities Asia may reduce its participation in the enlarged issued and paid-up share capital," Felda said in a statement.
While a reduction in the stake should not impact the IPO, Louis Dreyfus's move does not display the kind of confidence in the company that Felda would want portrayed prior to its high-profile listing.
The moves represent a small victory for Morgan Stanley (MS.N), which was the main adviser to Felda on the strategic partnership talks with Louis Dreyfus, sources had told Reuters earlier.
The sources who confirmed the stake deal were not authorized to speak publicly on the matter. Louis Dreyfus could not be immediately reached for comment.
The firm has been aggressive in expanding its business in palm oil. In 2009, it signed a joint venture deal with Singapore-listed Kencana Agri (KCAL.SI) to build and operate a palm oil trading port in Indonesia's Kalimantan province in Borneo Island.
It also recently set up a joint venture with a local company to acquire a greenfield palm oil concession in Indonesia.
CIMB Investment Bank (CIMB.KL), Maybank Investment Bank (MBBM.KL) and Morgan Stanley are joint global coordinators for the Felda listing, with JPMorgan (JPM.N) and Deutsche Bank (DBKGn.DE) also acting as joint bookrunners.
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