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Olam picks London for food ingredients IPO

Update of Olam International Ltd

Olam International has selected London for an initial public offering of its multi-billion pound food ingredients business. Singapore-based agricultural trading companies are looking to take advantage of investor interest in healthy eating and nutrition.

The company said Friday that Olam Food Ingredients would be listed on the London Stock Exchange in the first half of next year and is seeking a second listing in Singapore.

This decision benefits the UK market, which lags behind its international rivals in the fight to attract the largest and best companies.

Based on the reputation of its rival food ingredients business, OFI may be large enough to win the top FTSE 100 Index rankings. To qualify, OFI is worth more than £ 4 billion and must pass a nationality and liquidity test.

“With OFI’s current size and scale, we believe it will be a reasonable list of sizes,” said A Shekhar, CEO of the unit. The company will be headquartered in London and Singapore.

OFI, one of the world’s largest suppliers of cocoa beans, onions, garlic, coffee and almonds, recorded sales of S $ 12.5 billion and a pre-interest profit of S $ 800 million ($ 600 million) last year. .. With 15,000 employees, it operates more than 100 manufacturing plants and sources products from 2.6 million farmers worldwide.

OFI’s carving was last year when Oram focused on food ingredients such as cocoa, coffee, nuts and spices, as well as grains, oil seeds, cooking oil, rice and cotton.

The idea behind this move is to create two more focused companies and draw value from Olam’s complex corporate structure. Olam shares traded in Singapore have been flat over the past year. Another business unit, Olam Global Agri, will seek listing 6-12 months after OFI begins trading in London.

The legal separation of OFI must be completed by the end of the year.

Shekhar said London had forgotten to compete with other European stock exchanges because of its large and diverse investor base and a “fully developed” understanding of the food and beverage sector.

“We felt the combination of primary listings in London, where the business is well understood …. Simultaneous dual listing would be a good combination,” he said.

In addition to listing, OFI will also consider raising funds to support its growth plan. Last year, Olam acquired Old Thompson, the largest US-owned branded spice supplier. With a billion dollar transaction

“OFI is a growing company. We see an important pipeline of opportunities,” says Shekhar.

OFI will be spun off from Olam. In specie Distribution of shares to existing shareholders at the same time as the initial public offering in London.

Olam is dominated by Singapore’s state-owned investment company Temasek Holdings and holds a 53.2% stake. Another major shareholder is Mitsubishi Motors of Japan with 15%.

Shekhar said both shareholders are in favor of the split in a wave of consumer interest in health, taste and sustainable food sources.

OFI exists throughout the supply chain from production to trade to manufacturing and is well suited to meet the growing demand for traceable products.

“Sustainable and traceable foods tend to stay here,” Shekar said. “Another big trend is health, nutrition and well-being. Look at nuts and the proteins and fibers they provide, or the flavonoids and antioxidants in coffee.”

Shekhar said OFI’s capital structure determines the amount of debt the company will assume and its dividend policy, but not yet. The company is also in the process of identifying a chair that is independent of the board of directors.

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