Sime Darby – one of the largest palm oil producers in the world – will be restructuring before spinning off of its plantations and property businesses.
In an announcement on 27 February, the Malaysian conglomerate said it planned to list two independent companies on the Malaysian stock exchange – Sime Darby Plantation Sdn Bhd (Sime Darby Plantation) and Sime Darby Property Berhad (Sime Darby Property). Its industrial, motors, logistics and healthcare divisions would remain under Sime Darby Berhad (SDB). SDB will not own any stake in Sime Darby Plantation or Sime Darby Property.
Sime Darby is one of the largest companies on the Bursa Malaysia stock exchange with a market capitalisation of RM63bn (US$14bn) as at 24 February 2017.
It has operations in plantations, industrial equipment, motors, property and logistics, with plantations being its largest revenue generator.
Its oil palm cultivation, harvesting and milling operations are spread across more than 600,000ha of planted areas in Malaysia, Indonesia, Liberia, Papua New Guinea and Solomon Islands, while its land bank currently stands at one million hectares across these five countries.
It produces around 2.4M tonnes/year or 4% of the world’s crude palm oil (CPO) output, of which about 97% or 2.2M tonnes are Certified Sustainable Palm Oil (CSPO). Its annual output of palm kernel is about 0.57M tonnes, out of which 0.56M tonnes are Certified Sustainable Palm Kernel (CSPK).
Sime Darby produces oils and fats, oleochemicals, biodiesel, other palm oil derivatives and renewables.
It was formed in January 2007 when the ‘three Malaysian giants’ – Sime Darby, Guthrie and Golden Hope – merged into Synergy Drive, which was renamed Sime Darby in November 2007.
In its statement, Sime Darby said its restructuring would include the group's borrowings, transfer of certain assets – including land – within the group, and capitalisation of inter-company loans.
The proposed listing of Sime Darby Plantation and Sime Darby Property could be implemented together or at different times.
“We have to recognise changes in investor expectations,” said Sime Darby president and group chief executive Tan Sri Dato’ Seri Mohd Bakke Salleh.
“Today’s investors seek focus and prefer to invest directly in the sectors of their choice. Furthermore, this is also an opportunity for the three companies to raise capital, chart their distinct growth paths and enhance their profiles to improve performance.”