Olam Group delays listing agri unit on Saudi Exchange

Singapore’s Olam Group said that it does not expect to complete the initial public offering (IPO) of its agricultural unit, Olam Agri Holdings, by the first half of 2023, as the company has not yet received all necessary regulatory approvals.

“Given the distinct nature of the transaction, as Olam Agri will be the first foreign company not incorporated in the GCC to be listed in Saudi Arabia, the first dual listing on both the Singapore Exchange and the Saudi Exchange, all the necessary regulatory approvals required to launch this transaction are yet to be obtained,” Olam Group said in a bourse filing.

Olam said it will continue to pursue the IPO of Olam Agri at the next practical window. However,  the Asian food and agri-business giant did not provide an approximate time frame and said that there is no assurance that it will materialise.

Olam Agri’s listing was initially expected to be completed as early as the first half of 2023, with Olam aiming for about $600m to $700m in primary proceeds and as much as $400m in secondary proceeds, according to Bloomberg.

The listing of its other food ingredients unit — known as ofi — was supposed to take place after Olam Agri. Olam was pursuing a primary listing of ofi in London by Q2 2022, but the plan was delayed due to the geopolitical tensions in East Europe.

Olam Agri’s listing on the Saudi Exchange would allow the company to tap into the Middle East’s IPO boom, as well as the region’s growing market for commodities and supplies as GCC countries increase emphasis on food security.

Olam’s interests in Saudi Arabia

Meanwhile, Olam’s plan to list Olam Agri comes after the food and agribusiness giant completed the sale of a substantial minority stake of 35.4 per cent stake in the unit in December 2022 for $1.24bn to Public Investment Fund-backed Saudi Agricultural and Livestock Investment Company (SALIC).

The Singapore-based group said the deal implied a valuation of $3.5bn for Olam Agri – one of three operating groups formed in early 2020 – as part of the company’s re-organisation strategy.

Olam Agri and SALIC also entered into a strategic supply and cooperation deal, which will accelerate the Singapore-based firm’s access to large and high-growth Middle East markets.

“This marks a pivotal moment for Olam Agri as our strategic partnership with SALIC, whose interests align with Olam Agri’s focus on meeting the increasing demand for food, feed and fibre across high-growth end consumption markets, will accelerate Olam Agri’s growth into new markets,” Sunny Verghese, Olam Group’s co-founder and group CEO said last December.

Olam Agri is one of the biggest commodity trading companies globally that specialises in grains, oilseeds, rice, and animal feed.

The company’s full-year revenues shot up 39.6 per cent year-on-year to $27.3bn(SGD36.9bn) in 2022, driven by higher commodity prices across the grains and oilseeds complex, as well as edible oils and cotton.

Meanwhile, Olam Agri’s reported earnings before interest and tax (EBITA) of SGD857.7m, up 13.9 per cent on higher contribution from the processing and value-added segment.

Read: Olam Group plans to list agribusiness unit in Saudi Arabia