Sector News

Yara evaluates potential stock listing of minority share in Yara Clean Ammonia

May 7, 2022
Chemical Value Chain

Yara International ASA (“Yara”) announced that it is evaluating a potential initial public offering (“IPO”) of its Yara Clean Ammonia business (“YCA”) on the Oslo Stock Exchange. Consistent with Yara’s ownership approach, the evaluation of a potential future listing is focused on attracting minority investors and reflects Yara’s strategic ambition to enable the hydrogen economy, where clean ammonia will play a crucial role within zero-emission shipping fuels, power generation, green fertilizer production and other industrial applications.

YCA was established as a separate segment and business unit in February 2021 to focus on clean ammonia, i.e. green and blue ammonia [1]. Subsequently, Yara communicated that YCA would be set up as a separate legal entity and that Yara would maintain majority ownership. A potential IPO would raise capital to accelerate the growth of YCA, visualize the value of the business better and support increased management focus – for both YCA and Yara.

“The decision to evaluate a potential IPO of Yara Clean Ammonia represents a natural next step as Yara executes its strategy to broaden its business model. YCA remains core to Yara’s strategy and Yara will continue to provide long-term backing to YCA as its majority owner and preferred partner,” said Svein Tore Holsether, CEO and President of Yara. “As the world’s largest ammonia distributor – backed by own production assets and logistics infrastructure – Yara and YCA are uniquely positioned to capture value and take a leading position in the clean ammonia market.”

YCA is uniquely positioned to capture growth opportunities within clean ammonia production, transportation, and distribution. At the core of YCA is its leading midstream ammonia position; a global logistics and infrastructure network with a >20% market share [2] in the merchant ammonia market, covering operations from sourcing to sales. YCA sourced, transported and sold more than 4 million tonnes of ammonia in 2021. YCA’s Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) for the last 12 months was USD 166 million as per Q1 2022 [3]. Building on its competitive strengths, YCA has defined an ambitious growth strategy to expand both upstream, midstream and downstream in the clean ammonia value chain. As part of this strategic roadmap, YCA has built a robust project pipeline with significant investment decisions targeted over the next three years.

Clean ammonia offers a solution to the decarbonization of hard-to-abate sectors, such as shipping, power generation and agriculture. New use-cases represent major opportunities on top of the existing structurally robust ammonia market, with the size of the global ammonia market expected to more than double in volume by 2050 [4]. This is anticipated to lead to shifts in trade flows and increased trading of ammonia, which will significantly increase the importance of YCA’s midstream value chain position.

As a preparatory step in the event of a potential future IPO, Yara will initiate an internal process to organize YCA assets, contracts etc. into dedicated YCA entities/subsidiaries that, for now, will remain under Yara’s ownership.

ABG Sundal Collier and J.P. Morgan have been retained by Yara to advise on the evaluation of a potential IPO of YCA.

By Yara, Press Release

Source: yara.com

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