KUALA LUMPUR - Shares in Malaysian palm oil giant Felda Global jumped 18.46 per cent on its stock market debut Thursday, in the world's second-largest IPO this year after Facebook.
Felda Global opened at 5.39 ringgit (S$2.1) on the Bursa Malaysia, well up from the institutional price of 4.55 ringgit in the flotation, which raised US$3.12 billion.
The firm is the world's third-largest palm oil company by acreage.
Felda Global described the listing as "historic", adding that it marked the beginning of its transformation from a "Malaysian champion into a leading regional conglomerate and multinational business entity".
Despite the dark shadow that the eurozone debt crisis continues to cast over global financial markets, and the jitters sparked by Facebook's disastrous listing last month, analysts said Felda shares were well supported.
Ooi Chin Hock, a dealer with Malaysia's M & A Securities, said local fund managers were buying the shares, which were the "most active stock, volume leader and top gainer on Bursa Malaysia".
Half an hour after the opening, 120 million shares had been traded and the price was hovering between 5.36 to 5.37 ringgit, he said.
Facebook raised $16 billion from its IPO but its shares have plummeted since its debut.
The volatile economic environment has also forced the delay of other major offerings across Asia including a planned US$2.5 billion Formula One listing in Singapore.
But Yeah Kim Leng, chief economist with financial research firm RAM Holdings told AFP that despite global economic uncertainties there was pent-up demand for quality stocks.
The price of palm oil has tripled in price in the last decade, and the industry is the fourth-largest contributor to the Malaysian economy.
"There is also surplus liquidity in the Malaysian economy and coupled with low interest rates, investors are chasing Felda Global stock," said Yeah.
Palm oil is a key ingredient in soap and a range of food products whose consumption is predicted to soar in coming years, fuelled by growth in Asian economies.
Felda Global President Sabri Ahmad said at a pre-listing briefing Wednesday the company would expand to southeast Asian countries and Africa to grow oil palm, rubber and sugar cane.
"Demand (for palm oil) is good in China and India. Food business is quite resilient in a recession," he said.
Sabri on Thursday said the opening price was "within expectation".
Funds raised from the listing will be used to replant mature oil palms and further expand into downstream businesses to create a more self-contained global player.
The company is an arm of the Federal Land Development Authority, a government agency that previously provided land to the rural poor.
Prime Minister Najib Razak announced the listing plan in October as part of a wider push to divest state-run firms and increase foreign investment in the southeast Asian country.
Najib, who must call a general election by next April, also hopes to curry favour with the more than 112,000 settler families who own part of the plantation land and stand to gain 15,000 ringgit each.
Some settlers have opposed the listing due to concerns that the scheme may expose them to more risk and potentially rob them of their land but Felda Global has denied it.
Analysts say the scheme will help Malaysia's US$27 billion palm oil sector - the world's second largest - compete more efficiently with top producer Indonesia.
Felda Global is the biggest IPO in Malaysia since state oil firm Petronas' unit Petronas Chemicals Group Bhd. raised US$4.14 billion in late 2010.