SINGAPORE - Agri-food giant Olam International is seeking an initial public offering (IPO) of its Olam Food Ingredients (OFI) unit on the London Stock Exchange, with a concurrent secondary listing in Singapore.
The IPO is expected to raise two billion pounds ($3.75 billion), Reuters quoted sources familiar with the deal as saying. Olam declined to confirm the proceeds.
OFI's listing and concurrent demerger from its parent remain on course for the first half of next year.
The primary listing in Britain will give the food ingredients company access to London's large and diverse investor base, deep and liquid capital markets and strong understanding and research coverage of the food ingredients sector, said Olam co-founder and group chief executive Sunny Verghese.
"The concurrent listing in Singapore will enable shareholders to participate in the prospects for OFI. We also want to attract more investors in Asia," added Mr Verghese.
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 listings 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.
"We are still going through the process of deciding on a suitable listing venue for OGA. It is possible for OGA to be listed in London and Singapore. The combinations are all open at this point," Mr Verghese said.
Following the exercise, Olam shareholders will receive a share each in OFI and OGA for every share they own in Olam .
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, dairy, nuts and spice ingredients are produced.
Olam also reported its financial results for the first half of the year on Friday (Aug 13), with net profit growing 26.7 per cent to $421.5 million.
Operational profit after tax and minority interests 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 previous year, 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) advanced 22.9 per cent to $316.3 million over the same period.
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.
Mr Verghese said Olam was not negatively impacted by Covid-19 as the food commodities business is recession-proof. "Regardless of the pandemic, people still need to eat," he said.
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 and sustainable way".
The company has declared an interim dividend of four cents per share compared with 3.5 cents in the first half of 2020.
Olam shares closed up 2.78 per cent at $1.48 on Friday.