If I read it right as reported by BusinessTimes, after the failure in securing Malaysian financial institutions in the form of banks (which is a rare commodity), super cash-rich Middle-East giants are set to buy whatever company that makes money in the world, including Southeast Asia at this moment.

Kuwait Finance House (KFH) which was denied the Rashid Hussain Bhd (KLSE : RHB, stock-code 1309) which in turn owns the RHB Bank recently has turns to oil palm plantation, both Malaysia and Indonesia. The Islamic investment bank was reportedly carrying hundreds of millions of dollars walking around the street looking for acquisition in the next three months. Who can blame them considering the price of palm oil has surged over 80% since 18 months ago?

Kulim (Malaysia) Bhd said it was selling its entire Indonesian plantation business for US$125 million (RM431 million) to focus on more profitable ventures elsewhere. Boustead Holdings Bhd said it too might sell its Indonesian plantations to focus on developing estates at home.

Malaysia’s plantation index trades at about 18 times this year’s forecast earnings, above the wider market multiple of 16 times. Palm oil prices are off last month’s all-time high but are expected by experts to hold up over the next year or so.

So, what’s the real rational KFH (and potentially others) is looking into this un-exciting sector? All hints and opinions are pointing to the prospect of generating biofuel from the palm-oil, which make sense considering almost all Middle-East guys have this “oil” thing within their business-blood. And since biofuel is gaining popularity in Europe and North America as a green alternative to petroleum, what better way than to slowly buy into the palm-oil business in this region?

And could that be the reason why Genting Group (KLSE: GENTING, stock-code 3182) and Asiatic Development Berhad CEO Tan Sri Lim Kok Thay denied the speculation that Asiatic is up for sale and instead hinted that Asiatic could be an acquirer instead? He hinted (was he?) that Asiatic could flex the muscle to purchase IOI Corp instead.

FinanceTwitter has blogged about some of the potential smaller palm oil companies during the heat of palm-oil M&A back in Dec-2006. Could one of the companies ended up on the plate of KFH? You can read it more at Plantation Merger & Acquisition Heating Up.

Other Articles That May Interest You …

• Kuala Lumpur Kepong Follows The Smart Move
• Kuok Group Consolidates To Defend Palm Oil Business
• Singapore’s Wilmar To Bid PPB
• Plantation Merger & Acquisition Heating Up
• Guthrie, Sime, Golden-Hope Shareholders Under-Offered
• Who’s Behind Synergy Drive?
• After The Super-Merger Will Others Follow?

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July 12th, 2007 by financetwitter

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