Olam Agri’s dual listing in S’pore, Saudi Arabia to maximise value, raise funds for expansion: CEO

SINGAPORE - Commodity trader Olam Group plans to

list its soft commodities business in Singapore and Saudi Arabia

as early as the first half of this year, it said in a Singapore Exchange (SGX) filing on Tuesday.

Once approved, Olam Agri’s dual listing will be the first on the Singapore and Saudi bourses, as well as the first listing of a foreign company in Saudi Arabia.

The kingdom has some 250 companies listed on its stock exchange, all of which are incorporated in the Gulf.

The initial public offering (IPO) may involve new Olam Agri shares, as well as domestic and global sales of shares Olam Group holds in the unit. Funds raised could amount to as much as US$1 billion (S$1.3 billion), according to Reuters.

The move is part of Olam Group’s wider plan to

split and reorganise three business units,

as well as to maximise the value of each business, which are driven by different factors and trends, said Mr Sunny Verghese, the trader’s co-founder and group chief executive.

Olam Agri, which supplies and distributes staple commodities such as grains, edible oils and cotton globally and is involved in the farming, sourcing, processing and delivery of these raw materials, expects demand to increase.

“We expect more growth as the global population expands, incomes rise and consumption habits evolve from carb-heavy to protein-based diets,” said Mr Verghese.

Tuesday’s news also comes after Olam Group last year

sold a 35.4 per cent stake in Olam Agri for US$1.24 billion

to Saudi Agricultural and Livestock Investment Company (Salic), a unit of Saudi sovereign wealth fund Public Investment Fund.

The sale valued Olam Agri at US$3.5 billion. As a comparison, SGX-listed Olam Group has a market capitalisation of around $6 billion.

“Salic has chosen to invest in us as nutritional demands improve in Saudi Arabia and as food security becomes more important,” said Mr Verghese. He added that Olam Agri also trades in many of the 20 food staples deemed essential to food security in the kingdom.

Proceeds raised from Olam Agri’s IPO will be used to fund further expansion and growth, Mr Verghese said, adding that he aims to establish the firm as a formidable competitor of the likes of Cargill, Bunge, Dreyfus and Wilmar International.

Mr Verghese said plans for a

separate dual listing of Olam Food Ingredients (OFI) on SGX and the London Stock Exchange

will take place after Olam Agri’s IPO, subject to market conditions. OFI supplies, processes and distributes natural and sustainably sourced food ingredients such as cocoa, coffee and nuts.

“OFI is a play on demand for plant-based food ingredients from sustainable sources. This is driven by rising consumption of alternative proteins and a trend towards better health and nutrition in many of our markets,” said Mr Verghese.

Meanwhile, Olam Group, which will hold its remaining businesses and invest in start-ups in the food and agritech space, will remain listed on the SGX. The company is 51 per cent-owned by Singapore’s Temasek. Japanese trading house Mitsubishi Corp owns 14.4 per cent.

The IPOs of Olam Agri and OFI are expected to be sizeable and would come at a time when new listings on SGX have dwindled, particularly on its mainboard.

Mr Verghese added that

despite a drop in the number of IPOs globally,

stock exchanges in the Middle East have seen a jump in new listings, and that listing concurrently in both markets will maximise Olam Agri’s chances of having a successful IPO.

“There has been a rise in wealth and incomes in Saudi Arabia following a period of high oil prices. The region is enjoying higher liquidity compared with the rest of the world. The Saudis are also looking to bring more international companies to its exchange.”