OLAM AIMS BIG AS IT PREPARES FOR £2 BILLION LISTING OF FOOD INGREDIENTS DIVISION
A planned stock exchange listing of the food ingredients unit of the commodity trader Olam International, in the first half of next year, is set to raise the equivalent of billions of euros.
The Singaporean-headquartered parent company is aiming for a primary listing of Olam Food Ingredients (OFI) on the London Stock Exchange (LSE) and a secondary listing in its home market.
In an interview reported by international media, Sunny Varghese, Olam International’s co-founder and CEO, said the initial public offering (IPO) would be “amongst the larger IPOs” that the LSE has seen in recent times.
“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,” he added in widely reported comments.
Olam International, whose controlling shareholder is a Singaporean state investor, expects to raise about £2 billion (€2.33 billion) in its London IPO, according to reports.
Media have speculated that the IPO may value OFI at double this amount, putting the company on track to be included in the prestigious FTSE-100 index.
The secondary listing in Singapore is set to be achieved within the next year, according to media reports citing the company.
The Financial Times newspaper said that the listing in London was aimed at tapping into “growing investor interest in healthy eating and nutrition”.
Analysts see OFI as being ripe for expansion as the popularity of plant-based diets spurs increased demand for ingredients.
OFI is a major global supplier of coffee, cocoa beans, spices, garlic, onions and nuts and its most recent financial figures indicate that it is highly profitable.
In the first six months of 2021 the company’s turnover was Sing$6.8 billion (€4.27 billion) and its profits during that period before interest were Sing$316 million (€198.48 million) during the same half year.
The splitting of Olam International into two units, of which OFI is one, was announced by the parent company last year.
Edible oils, rice, cotton, commodity financial services, animal feed and grains are included in the second unit, Olam Global Agri.
The company sees carving the business up in this way as a way of encouraging growth and attracting investors focused on the particular interests of each division.
“By simplifying our businesses across two distinct and coherent groups, each with a clear vision for profitable growth, it sharpens our focus and provides opportunities to capitalise on key market trends, while continuing to leverage the benefits of the Olam Group,” Mr Varghese said in a statement on the company’s website.
The restructuring also ties in with the sale of Olam International’s rubber and sugar businesses, although the parent firm is set to develop new interests.
Founded in 1989, Olam says that it “work[s] with over 5 million farmers and operate[s] across the value chain more than 60 countries”.
It supplies products to in excess of 17,000 customers across the globe and says that its wide geographical reach allows it to maintain supplies throughout the year.
“Our on the ground presence has helped us build strong supplier relationships and market insight, [which is] beneficial to both us and our customers,” the company said in an online briefing paper.
Earlier this year Sial Paris Newsroom reported that OFI had bought Olde Thompson, an American spices and seasonings manufacturer.
Looking at the planned listing from the stock exchange’s point of view, The Armchair Trader described it as “a major vote of confidence” in the LSE.
In the wake of Brexit, the London Stock Exchange is said to have been keen to attract major international companies, especially in the wake of some organisations shifting their listing to Amsterdam.
Indeed, in February this year reports indicated that Amsterdam had supplanted London as the main trading centre in Europe.