SG’s Olam seeking $3b in London listing of food ingredients unit

Photo: Reuters

Olam International is considering raising about 2 billion pounds ($2.8 billion) through a London listing of its food ingredients unit next year, sources familiar with the matter said on Friday, as the Singapore-based trading house seeks to boost its valuation and step up acquisitions.

The company, one of the world’s biggest agricultural commodity traders, is listing Olam Food Ingredients (OFI) as part of a business overhaul flagged last year to focus on the two core businesses of OFI and Olam Global Agri (OGA) after the sale of sugar, rubber and other portfolios.

“It will be a substantial IPO. It will be amongst the larger IPOs done on the London Stock Exchange (LSE) in the recent past,” co-founder and CEO Sunny Verghese told Reuters in an interview, while declining to give a fundraising target.

The proceeds would allow OFI to accelerate growth and also accelerate acquisitions, he added.

“One of the reasons that we are doing this exercise of re-organising is to make sure that we can focus and simplify a fairly diverse complex portfolio,” Verghese said.

Singapore state investor Temasek Holdings became Olam’s controlling shareholder in 2014 after the trader’s accounting practices were questioned by short-seller Muddy Waters in 2012. Mitsubishi Corp became a shareholder in 2015.

“London being a major financial centre has no lack of liquidity and more importantly has investors who know how to price these things correctly,” said Justin Tang, head of Asian research at United First Partners in Singapore.

OFI’s portfolio includes cocoa, coffee and edible nuts, while Olam Global Agri (OGA) comprises grains, edible oils, rice and cotton, among others.

OFI and OGA’s competitors include privately-held Louis Dreyfus, Swiss-listed Barry Callebaut and Archer-Daniels-Midland, some of whom have revamped their businesses amid stiff competition.

Olam’s shares, which have a small float, ended up 2.8% on Friday, valuing the company at S$5.5 billion.

Verghese said OFI could join London’s FTSE-100 index of blue-chip companies.

A valuation above 4 billion pounds would enable OFI to get into the index and obtain a premium listing – which would require the company to have a free float of at least 25% and meet a tougher set of corporate governance requirements.

Winning OFI’s listing would be a boon for the LSE, which is trying to attract more global companies following Britain’s exit from the European Union.

Olam has said it is seeking a concurrent secondary listing in Singapore for OFI by the first half of 2022.

Two of the sources said Olam had appointed Citigroup, Credit Suisse, HSBC, JPMorgan and Morgan Stanley to work on OFI’s IPO. Four of the banks declined to comment, while there was no response from Morgan Stanley.

Verghese said OFI’s IPO could be completed by the second quarter of next year, and OGA could be listed as early as the fourth quarter of 2022.

On Friday, Olam reported a more than doubling of first-half operational profit, excluding exceptional items, to a record S$436.6 million ($321.5 million)

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.