SINGAPORE – Agri-food giant Olam International is seeking an initial public offering (IPO) of its food ingredients arm, Olam Food Ingredients (OFI), on the premium segment of the London Stock Exchange (LSE), with a concurrent secondary listing in Singapore.
OFI’s IPO and concurrent demerger from its parent remain on course for the first half of next year, Olam announced before the market opened on Friday (Aug 13).
OFI chief executive officer A. Shekhar said in a statement that the primary listing on the LSE will give the company access to London’s large and diverse investor base, deep and liquid capital markets, and strong research coverage across the food and beverage sector.
“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”, he said.
OFI was created in January 2020 following a reorganisation of Olam into OFI and Olam Global Agri (OGA).
The restructuring enabled Olam to explore various capital raising options, including potential IPOs of OFI and OGA. Olam first announced plans to list OFI by 2022 in February this year.
OGA, which is a global food, feed and fibre supplier, is still evaluating a potential IPO by the first half of 2023.
Olam shares were trading up five cents, or 3.5 per cent, to $1.49 at 9.30am on Friday, after the announcements.
OFI supplies raw food ingredients to global food and beverage brands, food manufacturers, retailers, and food service outlets, as well as several niche and premium regional players.It has a presence in the countries where the raw materials for its cocoa, coffee, nuts and spice ingredients are produced.
Olam also reported its financial results for the first half of the year on Friday, with net profit growing 26.7 per cent to $421.5 million.
Operational profit after tax and minority interests (Patmi) increased 116 per cent to $436.6 million and was the strongest since Olam’s inception.
This came as revenue surged 33.7 per cent to $22.83 billion, from $17.08 billion in the year-ago period, on the back of strong growth from both OGA and OFI.
OGA contributed to 67.8 per cent of total group revenue, with OFI accounting for 29.8 per cent.
First-half revenue for OFI rose 12.6 per cent year on year to $6.8 billion, while earnings before interest and tax (Ebit) rose 22.9 per cent to $316.3 million over the same period.
Meanwhile, OGA’s revenue was up 48.2 per cent year on year to $15.5 billion in the first half, while Ebit rose 58.9 per cent to $407.5 million in the same period.
Olam co-founder and group CEO Sunny Verghese said he expects the food commodities industry to improve further in the second half of the year as the world recovers from Covid-19.
He added that Olam has an important role “in providing essential food staples, food ingredients, feed and fibre to customers around the world in a safe, responsible an sustainable way.”