IN July, Felda Global Ventures Holdings Bhd changed its name to FGV Holdings Bhd. FGV, the listed company, was perhaps trying to distance itself from its 33.67% parent, the Federal Land Development Authority (FELDA).

And who can fault the board and management of FGV for wanting to do this as FELDA has been grappling with many issues linked to corporate governance and bad management for a long time.

“Having Felda as part of a company’s name became something like a stigma, a bad word,” one market watcher had commented then.

With the many changes at FGV, including the departure of president and CEO Datuk Zakaria Arshad in September and CFO Ahmad Tifli Mohd Talha earlier this month, there seems to be an attempt to change the company’s longstanding misfortunes, which mirror those of its parent, FELDA.

To recap, in end-June 2012, just after its listing, FGV had cash and cash equivalents of RM6.02 billion, current liabilities of RM784.22 million and long-term borrowings of only RM723,000.

Before it was listed, FGV was a wholly-owned subsidiary of FELDA, and Felda Holdings Bhd — the main operating plantation company — was jointly owned by FELDA (49%) and Koperasi Permodalan Felda (51%). In 2009, as part of an internal restructuring, FGV acquired FELDA’s 49% stake in Felda Holdings for RM1.57 billion cash. In 2013, after its listing, FGV acquired the remaining 51% for RM2.2 billion cash.

In FGV’s 2012 initial public offering, FELDA raised RM5.5 billion as part of its offer for sale of FGV shares. FGV raised RM4.46 billion from the sale of new shares, hence the healthy cash hoard as at end-June 2012.

FGV allocated 49.1%, or RM2.19 billion, of its RM4.46 billion proceeds from the IPO for the acquisition of plantation assets. In its prospectus, FGV said the timeframe for the acquisitions would be three years.

In July 2013, a year after its flotation, FGV announced a plan to acquire Sabah-based Pontian United Plantations Bhd for RM1.2 billion, which was not met with much fanfare by analysts. Pontian had about 16,000ha of oil palm plantation, among other assets.

Back then, BIMB Securities said FGV was forking out too much for the plantation company and was “sceptical” about the acquisition, suggesting that the earnings contribution to FGV would be minimal. “The purchase consideration valued the plantation land at approximately RM74,800 per ha, which is pricey in our view,” BIMB said.

The acquisition was concluded in October the same year.

In June 2015, FGV announced the acquisition of four plantation companies and a parcel of oil palm land in Sabah, measuring 836.1ha, from Golden Land Bhd for RM655 million in cash. The four companies owned 7,641.9ha of land.

Then came an acquisition that raised eyebrows — that of Asian Plantations Ltd. FGV concluded the acquisition in end-October 2014, paying RM628 million and assumimg RM388 million in liabilities, meaning it effectively forked out a little more than RM1 billion.

The high price tag, high acreage of non-plantable land and the former owners developing about 700ha of land that was not part of Asian Plantations were in the crosshairs of critics. The issue of whether a due diligence report by Deloitte, which was opposed to the acquisition, was shared with the board is being investigated.

It is understood that while FGV paid about RM65,000 per ha for Asian Plantations, other companies had only offered RM20,000 per ha.

FGV had acquired the company, incorporated in Singapore but listed on the UK’s Alternative Investment Market, after a voluntary conditional cash offer of £2.20 per share, a premium of 294.7% over the net asset value per share as at Dec 31, 2013.

Asian Plantations owns 24,622 ha of oil palm plantations through five wholly-owned estates, namely Incosetia Estate, Grand Performance Estate, Fortune Estate, Kronos Estate and BJ Corp Estate, located around Miri and Bintulu, in Sarawak.

However, as much as 40% of the land could not be planted — 7,300ha were unplantable and close to 2,600ha encumbered by native customary rights claims. This means as much as 9,900ha of Asian Plantations’ 24,000ha could not be planted.

Apart from Asian Plantations, FGV’s investment in Cambridge Nanosytems Ltd was also an issue. FGV has a 70% stake in FGV Cambridge Nanosystems, which incurred losses of RM27.5 million from 2014 to 2017. In a nutshell, the plan with FGV Cambridge Nanosystems was for the production of high grade carbon nanotubes and graphene from the by-products of crude palm oil.

FGV’s FY2016 annual report states that on Dec 8, 2016, the board approved the proposed divestment of its 70% equity interest in FGV Cambridge Nanosystems, and as at Dec 31, 2016, the company had been classified as an asset held for sale.

FGV’s 2017 annual report states that the proposed divestment of the 70% equity interest in FGV Cambridge Nanosystems was expected to be completed in 2018.

To be fair, the FGV management had also scuttled some plans, such as a proposed acquisition of a 55% stake in Chinese edible oil company Zhong Ling Nutril-Oil Holdings Ltd for RM976.25 million. Surprisingly, this acquisition was given the blessing of the Ministry of Finance.

FGV also opted out of a proposed acquisition of a 37% stake in PT Eagle High Plantations Tbk for US$680 million (RM2.89 billion), when the deal was announced, after merchant bankers advised against it.

Despite the many acquisitions, for its six months ended June 2018, FGV suffered a net loss of RM21.90 million from RM7.04 billion in revenue.

As at end-June, it had deposits, cash and bank balances of RM1.64 billion, RM3.10 billion in short-term borrowings and RM1.13 billion in long-term debt commitments. For the six months, FGV’s finance costs totalled RM95.13 million.

How did this slide happen, and who is accountable? Is it sufficient to change the CEO at FGV or should more people, including those on the board or former board members, be taken to task?

To put things in perspective, FGV’s market capitalisation has tumbled by RM14.82 billion since June 2012.