Malaysia's oil palm farmers will be getting a $553 million election-year windfall from an initial share sale of a giant state-controlled palm oil plantation company, Prime Minister Najib Razak has announced.

Najib has been trying to regain political momentum with a slew of government handouts after his ruling National Front suffered an unprecedented setback in 2008 elections.

Felda Global Ventures Holdings (FGVH) is looking to raise $3 billion, when it lists on the Malaysian stock exchange next month, in what would be the world's second-largest initial public offering (IPO) this year after the Facebook listing.

About a fifth of the proceeds from selling 2.19 billion shares will be handed out to 112,635 farmers who work on land allocated by the Federal Land Development Authority (Felda), Najib said.

While Felda's listing of its commercial arm brings financial firepower to Malaysia's $27 billion palm oil sector, giving some of the proceeds to farmers - a key vote bank - is another sign that Najib could be ready to call snap polls within weeks.

The opposition has criticised the listing saying the farmers' cooperative will lose control over how the plantation company is run.

"We are not trying to kill the farmers with the listing as the opposition says," Najib told a gathering of about 10,000 farmers at an oil palm estate in his home state of Pahang in central Malaysia. "We are making history with this windfall.

"The listing marks a new era and is a step forward from my father's dream," he said.

Najib's father, former prime minister Abdul Razak, started Felda in the 1950s, handing out land to impoverished ethnic Malays. The farms expanded to 880,000 hectares (2.2 million acres) and helped Malaysia become the second-largest palm oil producer in the world.     

The listing of FGVH clubs together refineries, plantation management companies and logistics firms as Malaysia looks to build an agribusiness to rival Singapore's Wilmar International.

Under the windfall payment from the IPO, each farmer's household will get about 15,000 ringgit ($4,900), which is more than a worker makes in a year under a newly announced national minimum wage of 800 ringgit to 900 ringgit a month.

"Najib is trying hard to maintain his voter base even if he does not explicitly say this is election related," said Ooi Kee Beng, a deputy director at the Institute of Southeast Asian Studies of Singapore.

Younger Felda settlers had initially opposed the listing,  fearing a loss of control over an asset their rural cooperative has invested in for decades. - Reuters