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The Chain: Bumitama dropped by Deutsche Bank; Boustead IPO; and Asian Agri legal palm oil commitment

May 28, 2014

Deutsche Bank drops palm oil supplier Bumitama (BAL:SP): This week, Deutsche Bank announced that it had sold all of its shares in Indonesian palm oil supplier Bumitama (BAL:Singapore).

Previously, in March of 2014, Deutsche Bank announced that it was aware of deforestation issues in Bumitama’s supply chain, and had correspondingly reduced its shareholdings; now it has finalized that divestment.

Bumitama has been the subject of repeated criticism from several NGOs, with remote sensing and on-the-ground photographic evidence showing that Bumitama has repeatedly cleared forest and peatland and displaced orangutans in different parts of Kalimantan (Indonesian Borneo). Bumitama has provided repeated assurances that it would cease all land clearing, but new remote sensing and photographic evidence has shown ongoing clearance as recently as this month, raising concerns with both investors and consumer companies. Procurement executives in more than five major international palm oil consumer companies have told Chain Reaction Research that they have taken steps to ensure that they do not source palm oil from Bumitama because of these concerns.

Chain Reaction Research will provide an in-depth report on Bumitama’s sustainability and financial risk next month.

Other recent palm oil industry news includes:

  • Upcoming IPO from Boustead Plantations (BOPL:KL): Boustead Plantations (BOPL:KL), a Malaysia-based palm oil producer, will list shares on Bursa Malaysia in June. Boustead Plantations is the plantation arm of Malaysian conglomerate Boustead Holdings Bhd. Boustead Plantations currently aims to raise 1.05 billion ringgit ($327.05 million USD) from its offering of 163.57 million shares to institutional investors and 64 million shares to the Malaysian public. The IPO will be used to fund expansion of Boustead Plantation’s planted area, largely in Malaysia. The market debut is set for June 26, with pricing finalized on June 11. Please let us know if you would like more information on Boustead Plantations prior to the IPO.
  • Asian Agri commits to stop sourcing illegal palm oil: Asian Agri, one of Indonesia’s largest palm oil producers, recently announced a commitment that all of its suppliers must provide proof that their palm fruits were legally harvested. Asian Agri was previously criticized for illegal logging in the Tesso Nilo National Park in Sumatra, Indonesia.Asian Agri is a privately held company, but its commitment, if fulfilled, could reduce risk in the supply chains of a number of palm oil companies that have sourced from Asian Agri.

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