Olam Group, on Jan 10, announced that it plans to list its majority-owned agri-business subsidiary, Olam Agri Holdings, as early as in the first half of 2023.
This is earlier than the expected two-year timeline given by Sunny Verghese, co-founder and group CEO of Olam Group. Verghese, who is also the CEO of Olam Agri, spoke at a briefing in March 2022, when the group announced that it had entered into a strategic partnership with The Saudi Agricultural and Livestock Company (SALIC).
The group adds that it is seeking a primary listing on the Mainboard of the Singapore Exchange (SGX) and exploring a concurrent listing on the Saudi Exchange, subject to market conditions.
If the concurrent listing takes place, the Olam Agri initial public offering (IPO) will be the first dual-listing for a company on these two bourses. It will also be the first-ever listing in Saudi Arabia of a non-Gulf Cooperation Council-incorporated business.
According to Olam, the decision to target an IPO in the first half of 2023 follows a “thorough” review in terms of maximising Olam Group’s long-term shareholder value.
“The decision also considers the global agri-business trends, rising food security concerns and Olam Agri Holdings’ demonstrated growth and sound track record of performance,” says the group.
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“Olam Agri has demonstrated a consistent performance track record with operating profit rising at a compound annual growth rate (CAGR) of 40.1% over the last three years, capitalising on its position in emerging markets even amidst challenging macroeconomic conditions and rising geopolitical uncertainty,” says Verghese.
“With the completion of the minority stake sale and strategic partnership with SALIC, Olam Agri is positioned to grow as a result of the demand for food, feed and fibre across end-consumption growth markets,” he adds.
On the dual-listing in Saudi Arabia, Verghese notes that it will welcome investors in the Middle East, which is a region the group intends to grow further.
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Olam Group first announced its re-organisation plan in January 2020 before separating the business into three distinct operating groups in January 2022.
On March 25, 2022, the group announced that it had entered into a strategic partnership between Olam Agri and SALIC where a 35.4% substantial minority stake in Olam Agri Holdings was sold for US$1.24 billion ($1.7 billion). The sale was completed on Dec 23, 2022.
“Today’s announcement marks yet another milestone on our re-organisation journey to maximise long-term value for Olam Group’s shareholders. Together with the planned ofi IPO, shareholders have an opportunity to diversify their portfolio while still participating in the unique investment prospects for Olam Agri and ofi individually,” says Verghese.
“The planned listings would allow Olam Agri and ofi to capitalise on the key trends in their respective sectors and strengthen their respective balance sheets, improve access to capital markets, broaden their shareholder base, and allow them to be better understood and valued as standalone entities with very different business propositions as they both continue to develop their differentiated leadership positions in the global markets,” he adds.
Shares in Olam Group closed 1 cent lower or 0.65% down at $1.54 on Jan 9.
