KUALA LUMPUR: Lembaga Tabung Haji (TH) is considering taking its agricultural firm, TH Plantations Bhd, private, people with knowledge of the matter said amid a rally in palm oil prices.
TH has asked banks for proposals on the potential deal for the owner of palm oil and rubber plantations, one of the people said, asking not to be identified as the information is not public.
Shares in TH Plantations have risen 4% in the year to date, giving it a market value of about RM526 million. TH owns 73.8% of the company.
Discussions are still in the early stages and TH could decide not to proceed with the plan, the source said.
TH and TH Plantations did not respond to requests for comment today.
The potential privatisation of TH Plantations comes after palm oil prices reached an all-time high in May, triggering a flurry of deals activity among Malaysian planters.
Palm prices are expected to remain high due to lower production of palm oil and other oils, planters Sime Darby Plantation Bhd and FGV Holdings Bhd said this month, following the release of their latest quarterly earnings.
The challenges of meeting environmental, social and governance requirements around issues such as sustainability and labour rights are contributing to consolidation in the sector, according to analysts.
TH was set up in 1963 to offer shariah-compliant financial services for Islamic savers planning to make the pilgrimage to Mecca, Saudi Arabia. The state-owned fund, which also offers logistical assistance for pilgrims, has about nine million depositors and 123 branches, according to its website.
The government in July announced plans to improve the fund’s management and operations, including a move to list it as a prescribed Islamic financial institution.