Asian Food Trader Olam Targets London’s FTSE 100 for Unit’s IPO

(Bloomberg) -- Olam International Ltd., one of Asia’s biggest agricultural commodity traders and suppliers, has a target for its food ingredients unit to become part of the FTSE 100 after its initial public offering in London.

The company, a major supplier of cocoa beans and products, green coffee and spices, expects the IPO to be “one of the bigger listings” on the London Stock Exchange in several years, CEO Sunny Verghese said in an interview Friday.

While the exact size is yet to be determined, Olam sees the unit potentially making it to the FTSE 100 share index, which consists of 100 London-listed companies with the highest market capitalization, according to Verghese.

Olam announced plans Friday for a primary listing of its food ingredients business in London, while preparing for a concurrent secondary listing in Singapore, according to a statement. The company also set a timeline to sell shares of another unit in an IPO as early as the second half of 2022.

The moves follow a major overhaul of operations announced last year, which divided the Singapore-based group’s portfolio into two segments. One is Olam Food Ingredients, which consists of cocoa, coffee, edible nuts, spices and dairy, and offers products catering to the growing demand for healthier food.

The other is Olam Global Agri, which supplies food, feed and fiber with a focus on emerging markets in Asia and Africa. It includes the grains, animal feed, edible oils, rice, cotton and commodity financial services businesses.

London Investors

“The primary listing on the LSE will give us access to London’s large and diverse investor base, with its deep and liquid capital markets, and enable us to benefit from its strong understanding of and research coverage across the food and beverage sector,” said A. Shekhar, Chief Executive Officer of OFI. “The concurrent listing in Singapore will also enable us to retain our strong local shareholder base and further tap into growing investor appetite in Asia.”

The share sale is part of a strategic review published in January 2019, which aims to unlock and maximize long-term value. OFI purchased California-based spice manufacturer Olde Thompson for about $950 million earlier this year. Olam announced a S$601.7 million ($443 million) rights issue in June to cover partial repayment of a loan used to purchase Olde Thompson.

Olam also posted first-half earnings on Friday, showing net profit rose 27% from a year earlier to S$421.5 million. Singapore’s state investor Temasek Holdings Pte owns about 53% of the company, while Japanese trading house Mitsubishi Corp. holds 15% following the rights issue.

Verghese said shareholders are supportive of Olam’s reorganization and will all stay on as investors. The company plans to increase headcount given the need to duplicate some key functions across separate operating entities following the restructuring, Verghese said.

Olam’s shares climbed as much as 4.2% in Singapore after the announcements, the biggest intraday gain since May. This compares with a 0.7% drop in the benchmark Straits Times Index. Still, the stock is little changed this year, even as agricultural commodity prices rallied.

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