Liberia-focused Equatorial Palm Oil lists on AIM

Equatorial Palm Oil (AIM: PAL) (EPO) joined London’s AIM market this morning following a £6.5m IPO. The newly listed, £14.3m market-cap company is developing sustainable palm oil plantations and a crude palm oil (CPO) processing operation in Liberia. According to EPO, palm oil is the most important and widely produced edible oil in the world, and demand is projected to grow at 5-6% per annum over the next five years.

“EPO offers a fantastic opportunity to enter into the fast growing and highly lucrative palm oil market. Our aim is to be a sustainable, low-cost producer of crude palm oil in Africa through the reactivation and development of existing plantations and our agricultural land bank in Liberia”, EPO chairman Michael Frayne said. “We have a fantastic land holding and a management with large scale oil palm plantation development experience, having worked with the likes of New Britain Palm Oil and Harrisons & Crosfields”.

The company issued 37.1m ordinary shares at 17.5 pence each through a placing. The money will be used to develop sustainable palm oil plantations and a CPO processing operation in Liberia, where the company controls approximately 169,000 hectares of land. 

The operational strategy is focused on three core business activities, the rehabilitation of existing oil palm plantations, the development of new plantations and the development of out-grower small holdings. 

Liberia is a politically stable country and is becoming a fast growing investment destination for multi-national corporations, EPO said. Moreover, the company noted that the oil palm is indigenous to West Africa and that it believes the application of South-East Asian techniques and the latest seed genetics may enable Africa to become a key player in the world palm oil market again.

EPO also noted that major international palm oil producer Sime Darby is currently developing 220,000 hectares of palm oil and rubber plantations in Liberia.

“Our three project areas will be advanced in tandem with active out-grower programmes, which will importantly provide major employment to the country. The projects lie between the Ports of Buchanan and Greenville, which means our palm oil processing mill, due to be running later this year, will benefit from easy access to the West African market” Frayne added.

EPO has secured government ratified investment agreements for the rehabilitation of the palm oil plantations. Operations are already underway at the Butaw plantation and Palm Bay plantation.

According to Frayne, the immediate reactivation of 3,000 hectares plantation will provide early cash flow and demonstrate the business’ scalability.  Furthermore the company believes that the rehabilitation should immediately enhance land valuations. Developed oil palm plantations are valued in the range of US$15,000-22,000 per hectare.

EPO’s management team is chaired by Michael Frayne, who is a co-founder of the company. The team has extensive international experience in managing oil palm plantations, including EPO’s managing director Peter Bayliss, who previously managed New Britain Palm Oil’s 10-year programme in Indonesia, which spanned 187,000 hectares of palm oil and 26,000 hectares of rubber.

Mirabaud Securities LLP and Shore Capital Stockbrokers Limited are Joint Brokers to the company and Shore Capital and Corporate Limited is its Nominated Adviser.
EPO is the result of a reverse takeover by Liberian Forest Products of Equatorial Biofuels PLC (AIM: EBF), first announced in August 2006.

http://www.proactiveinvestors.co.uk/companies/news/13756/liberia-focused-equatorial-palm-oil-lists-on-aim-13756.html