📒 Quick Take: Felda’s Indonesian Albatross
Malaysia’s Felda is struggling to unwind its expensive Indonesian deal, complicating its plans to turn around its plantation business.
Malaysia’s Felda faces an uphill battle to claw back its hefty investment in Indonesian conglomerate Rajawali Group’s plantation company.
Some minority shareholders and politicians accused former Malaysian Prime Minister Najib Razak of pushing the deal to help his Indonesian friend Peter Sondakh, which was denied by both sides.
Felda’s unit won a Singapore arbitration last year, but Rajawali filed a court petition to block the enforcement in Indonesia.
Malaysia’s Federal Land Development Authority (Felda) is struggling to unwind its expensive Indonesian deal, complicating its plans to turn around its plantation business.
Felda is set to delist its palm oil unit, FGV Holdings, at less than a third of its initial public offering price to focus on boosting yields and cutting costs, Bloomberg reported on 15 August 2025. However, the Malaysian government agency faces an uphill battle to claw back its hefty investment of half a billion dollars in Indonesian palm oil producer Eagle High Plantations.
In 2015, FGV announced that it would buy a 37% stake in Eagle High from Indonesian tycoon Peter Sondakh’s Rajawali Group for USD 680 million. The proposed acquisition implied a valuation of 63 times Eagle High’s estimated net profit for that year, far above its peers’ trading multiple of 14 to 55 times.
A due diligence report also raised red flags over Eagle High’s debt levels, cashflow, potential dividend leakage and over-stated planted areas. Some of FGV’s minority shareholders and opposition politicians accused then-Malaysian Prime Minister Najib Razak of pushing the deal to help his Indonesian friend, which was denied by both sides.
Long Ties
Sondakh forged powerful connections that helped him to grow a modest coconut oil and timber export business that he inherited from his father into a sprawling conglomerate known as the Rajawali Group.
His early ventures included partnering Bambang Trihatmodjo, a son of Indonesia’s former president Suharto, to build the country’s first privately owned television network, Rajawali Citra Televisi Indonesia (RCTI), and the Grand Hyatt hotel in Jakarta.
Sondakh crossed paths with Najib when the Malaysian politician was still rising up the ranks of the United Malays National Organisation (UMNO), according to a Malaysian source. They stayed in touch over the years and would often meet during Najib’s visits to Jakarta, this source said.
Rajawali was likened to one of Indonesia’s first private equity firms as it had a track record of spotting opportunities and flipping assets, including a sale of cigarette manufacturer Bentoel Internasional Investama to British American Tobacco. However, the Indonesian group also made less successful bets, such as Eagle High and taxi operator Express Transindo Utama.
After FGV’s proposed acquisition of Rajawali’s Eagle High stake sparked a backlash, it was shelved temporarily and revived in December 2016 with some changes to the transaction: The price was cut by 26% to USD 505.4 million and the purchasing entity was switched to Felda’s unlisted unit FIC Properties.
FIC reportedly took a RM 2.5 billion (USD 591.6 million) loan from another Malaysian state-owned entity, GovCo Holdings, to fund the acquisition. However, the deal started unravelling after Najib’s Barisan Nasional coalition, which had reigned for six decades, was defeated by the opposition bloc led by Mahathir Mohamad in 2018.
Put Option
FIC’s agreement with Rajawali included a put option that would require the Indonesian group to buy back the Eagle High stake at USD 505.4 million plus 6% annual interest. On the option end date of 11 May 2022, the put could be exercised “at the sole and absolute discretion of [FIC] for any reason whatsoever”, according to court documents.
Before 11 May 2022, FIC could only exercise the option if certain events were triggered. In January 2019, FIC sent a put notice on the basis that Eagle High had failed to secure a Roundtable on Sustainable Palm Oil (RSPO) certification within 30 months. However, Rajawali disputed its validity and initiated arbitration against FIC at a Singapore tribunal, which ruled in favour of the Indonesian group.
FIC exercised the put again on 11 May 2022 and eventually won against Rajawali at the Singapore International Arbitration Centre last year. However, Rajawali filed a petition at the Central Jakarta District Court on 6 February 2025 to block the enforcement of the arbitration award in Indonesia, according to The Edge.
Felda may have to slog through the Indonesian court system with uncertain prospects, while Rajawali seems to receive a fresh boost from its gold mining unit Archi Indonesia. Rajawali has paused a potential sale of its controlling interest in Archi following a jump in gold prices, Bloomberg reported in June 2025.
Nearly a decade after the Eagle High deal, the Indonesian palm oil company is still an albatross around Felda’s neck.