SINGAPORE (REUTERS) - Singapore-based commodity trader Olam Group said on Thursday (March 24) it does not expect the initial public offering (IPO) of its food ingredients unit to take place as originally planned during the second quarter of this year.
The company had announced plans in August for Olam Food Ingredients (OFI) to pursue a primary listing in London, in an IPO that sources said could raise about £2 billion (S$3.59 billion). This would have made it one of the biggest London IPO in years.
Due to current market conditions as a result of the ongoing conflict in Ukraine, Olam said it does not expect the unit's IPO to take place during the second quarter.
The company’s shares tumbled after the news, closing the day at $1.77 apiece, down 5.35 per cent.
Globally, many companies have delayed debt and equity fund-raising plans amid volatile markets since the Russia-Ukraine crisis as investors worry about the impact of soaring inflation, rising interest rates and weaker economic growth.
Olam had also planned for a secondary listing of its food ingredients unit in Singapore in the first half of 2022.
It said on Thursday that it remains committed to pursuing a public listing of the business and will “evaluate the appropriate timing of such a listing on an ongoing basis, taking into account prevailing market conditions”.
In the same announcement, OFI said it has also appointed three non-executive directors, including Olam Group’s co-founder and group chief executive Sunny Verghese, to its board.
The other two directors are Temasek’s joint head of investment and head of portfolio development Nagi Hamiyeh, who is also a non-executive director of Olam Group, and Ms Nancy Cruickshank.
Ms Cruickshank currently serves as a non-executive director on the boards of London-listed apparel company The Style Group, motor finance company Oodle Finance in the UK, Luxembourg-based shopping platform Allegro and Irish bookmaking company Flutter Entertainment.
Singapore-listed Olam trades globally in crops ranging from coffee to corn. In Ukraine, it exports mainly corn and wheat, as well as some sunflower seeds and sunflower oil. It also imports cocoa and dairy products.
Currently though, Ukraine has shut down all its ports, and this has disrupted the flow of key corn and wheat shipments abroad.
In Russia, Olam runs a large dairy processing business and trades in a variety of crops ranging from animal feed to peanuts. The company has not disclosed if its Russian operations are still running.
During an interview with The Straits Times last month, Mr Verghese revealed that sales volumes from the company’s businesses in Ukraine and Russia are not significant, representing less than 1 per cent of overall revenues.
However, Russia and Ukraine account for a combined 19 per cent of the world’s corn trade of 204 million tonnes and 30 per cent of the global wheat trade of 207 million tonnes, so any disruption to harvesting and production would impact global prices, he said.
Mr Verghese noted that the dearer food prices will add to Olam’s overall cost of capital.
• With additional information from The Straits Times