It could potentially take two years before Olam is able to effectively launch the initial public offering (IPO) and demerger of its operating unit Olam Agri Holdings, its co-founder and group CEO Sunny Verghese said in a briefing today.
This follows an earlier announcement that Saudi Agriculture and Livestock Investment Company is acquiring an estimated 35.4% substantial minority stake in Olam Agri for US$1.24 billion.
“We will have to wait for some time because the deal will only be completed before the end of the year. The new shareholders will have to join us, understand the business and feel comfortable with it before we can effectively launch the IPO,” said Verghese.
He clarified that the company does not expect any special dividend to be paid out as a result of the transaction. The entire proceeds will go towards repaying the company’s debt at the group level and will not impact either Olam Agri or Olam Food Ingredients (OFI).
Separately, Olam is working on exiting deprioritised assets under Olam Global Holdings as well as forming strategic partnerships for its gestating businesses. The company is also identifying the right strategic partners that will allow it to take both Olam Ventures and Olam Technology and Business Services to its full potential.
“It is very difficult to say the timing on when each of these will be completed. But we would think that in the next two years, much of these plans would be fully executed in all these different component steps,” said Verghese.
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On March 24, Olam announced that it is postponing the planned separate listing of OFI on the London Stock Exchange, given market conditions negatively hit by the war in Ukraine. The IPO was slated to take place during 2Q202, with a concurrent secondary listing in Singapore.
As the OFI IPO will be fairly substantial, the company would like to do it at the “right time”, said Verghese. “We are fully prepared and ready to pursue the IPO [at] the first available opportunity based on prevailing market conditions,” said Verghese.
As at 1.17pm, shares in Olam are trading 9 cents higher or 5.08% up at $1.86.
Photo: The Edge Singapore
