This article first appeared in The Edge Financial Daily, on June 28, 2016.

KUALA LUMPUR: Genting Plantations Bhd (GENP) is buying 21,995ha more land in Indonesia through the purchase of two companies — Cahaya Agro Abadi Pte Ltd (CAA) and Palm Capital Investment Pte Ltd (PCI) — for a combined US$42.15 million (RM172.39 million).

This will bring GENP Group’s combined plantation land bank in Malaysia and Indonesia to 260,371ha from its present 238,376ha.

In a filing with Bursa Malaysia yesterday, GENP said its 73.69%-owned unit Palmindo Holdings Pte Ltd had entered into two agreements with Green Palm Capital Corp, a related party, to acquire the two loss-making companies.

GENP intends to finance the proposed acquisitions via internal funds and external financing.

The first deal sees GENP acquiring CAA for US$34.55 million, which holds the rights to develop 8,095ha of land in Kabupaten Sanggau in West Kalimantan Barat into an oil palm plantation.

Concurrently, GENP is buying PCI for US$7.6 million, which holds the rights to develop 13,900ha of land in Kabupaten Sintang, also in West Kalimantan, into an oil palm plantation.

“The proposed acquisitions are in line with our long-term strategy to increase interest in the palm oil business, consistent with its confidence in the continued growth prospects of the industry,” said GENP.

It added that the move represents a positive step by the group towards realising its vision of establishing itself as a major player in the industry.

GENP also said the lands are located within close proximity to GENP’s other land bank in West Kalimantan and presents potential synergies and economies of scale.