International Finance Corporation (IFC), a member of the World Bank Group, has proposed a debt investment of $120 million in Singapore-based commodities firm Olam International, according to its disclosure.
IFC has proposed an investment of up to $120 million in unsecured, corporate loan to Olam to finance the Singapore-listed company’s procurement activities, farmer financing and market access in certain countries in Africa, Southeast Asia, and the Pacific.
Olam is engaged in agri-business, handling sourcing, processing, packaging, and merchandising of agricultural products and food ingredients across 66 countries. The main shareholders of the company are Temasek Holdings (53.6 per cent) and Mitsubishi Corporation Japan (17.4 per cent). Olam’s management team owns 6.5 per cent of the company.
Listed on the SGX-ST on February 11, 2005, Olam currently ranks among the top 30 largest primary listed companies in Singapore in terms of market capitalization.
“With the proposed financing, IFC will support Olam’s efforts to create markets for smallholder farmers in IDA countries, most of whom are unbanked or disconnected from financial systems,” the IFC said.
The proposed loan will support Olam’s supply chain financing for sourcing of crops primarily grown by smallholder farmers in several countries, including FCS/IDA Timor Leste, Papua New Guinea, and Uganda, which represents a shared strategic priority for both IFC and Olam, as well as Vietnam and Indonesia.
The IFC also said that the financing impact will be centered around the nearly 40,000 smallholder farmers supplying Olam who will benefit from reliable access to market, as well as finance and extension services, with positive implications on yield enhancement, optimal inputs usage and increased income.
The farmers may also participate in the Olam Livelihood Charter, the relevant certifications, and Olam’s digital farmer platform, to obtain better prices for products meeting certification requirements and also to ensure the sustainability of the supply chains.
“Olam’s work with farmers also has the potential to generate more extensive market impacts by influencing the way other traders and integrators manage similar issues of competitiveness and sustainability,” the IFC said.
Olam recently secured a $163-million loan from the Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA).
In a statement announcing the financing from ADB and JICA, Olam had said the fresh funds would be deployed towards capital expenditure and permanent working capital requirements of the company and Cafe Outspan Vietnam limited, a wholly owned subsidiary.