Asian Plantations

ADD

16/08/2010 Robert Tyerman

Malaysia-focused Asian Plantations has raised £4.25m at 110p to help fund its £7.8m takeover of neighbouring palm oil planter Fortune Plantation.

The two-stage deal, which will be partly funded from a £5m local banking facility, will take the acquisitive AIM-quoted company's palm oil land from 10,850 hectares to more than 16,000 hectares, 4,000 hectares short of its target of 20,000 hectares by 2011.

Joint chief executive officer Dennis Melka argues the terms of the Fortune takeover provide this added land at roughly $5,500 (£3,300) a hectare, against a market price of mature Malaysian palm oil estates of $22,000 a hectare or more. He says Singapore-based Asian Plantations will be able to use the same mill for its own and Fortune's adjacent production and foreshadows 'serious cash flow' coming as from 2012.

Existing shareholder Steadfast Financial, a $3bn New York investment group, is subscribing to the placing and taking its own Asian Plantations holding to 22.9%. Floated last November at 75p and recommended by Growth Company Investor in January at 84.5p, the shares have now reached 116p and should have further to go for medium-to-long term investors.

Tags: AIM, Emerging markets, Fundraisings, Mergers & acquisitions

Sector: Food Producers

Companies: Asian Plantations

Market cap: £35.54m

PE Forecast: n/a

Share price: 116p