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Olam Food Ingredients on track for London IPO, concurrent listing in Singapore in early 2022

August 22, 2021
Consumer Packaged Goods

Olam International Limited has revealed that its operating group, Olam Food Ingredients (OFI), a key player in natural and sustainable food ingredient solutions, is planning a primary listing on the premium segment of the London Stock Exchange.

OFI will concurrently seek a listing in Singapore.

At the start of 2020, Olam said it was exploring potential carve-outs and IPOs. The global food and agri-business moved forward with its strategy to unlock and maximize its long-term value by reorganizing the business into two new distinct operating groups focusing on food ingredients and global agri-business.

And now, OFI – which works with some of the world’s best-known food and beverage brands, food manufacturers, retailers, and foodservice outlets – is pursuing a London listing as part of that restructuring plan, initially flagged last year.

OFI has established market-leading positions across a range of on-trend, natural and plant-based products, delivering sustainable and innovative solutions to consumers worldwide.

It has a deep-rooted and established presence in several countries where the raw materials for its cocoa, coffee, dairy, nuts, and spices ingredients are produced.

AtSource traceability
OFI has built sustainability and traceability into its core business model, enabling better quality and more reliable and transparent supply.

Key to this is Olam AtSource, a platform that provides actionable data for manufacturing and retail customers of the third-party supply chains for products like coffee, cocoa, cashew, cotton and rice. The platform won the Reuters Responsible Supply Chain Award in 2020.

OFI stresses its “unique global scale and presence across the value chain,” which it says delivers nutritious food ingredients and solutions in an environmentally sustainable way.

Through its purpose to “reimagine global agriculture and food systems,” Olam aims to address the many challenges involved in meeting the needs of a growing global population while achieving a positive impact for farming communities, the planet and stakeholders.

Stock market listing
“The decision to pursue a stock market listing is a major milestone for OFI, and we are looking forward to presenting this exciting opportunity to investors globally through a proposed primary listing in London and a concurrent secondary listing in Singapore,” says A. Shekhar, CEO of OFI.

“The primary listing on the LSE will give us access to London’s large and diverse investor base, with its deep and liquid capital markets, and enable us to benefit from its strong understanding of and research coverage across the food and beverage sector. The concurrent listing in Singapore will also enable us to retain our strong local shareholder base and further tap into the growing investor appetite in Asia.”

“The results reported today show that OFI is a strong business uniquely positioned to take advantage of long-term consumer trends within the food and beverage industry. Our integrated global network, servicing large, attractive and growing end-use categories within an expanding on-trend ingredients portfolio, makes us a compelling investment for anyone looking to tap into growing global demand for food that is healthier, traceable and sustainable.”

Financial highlights
In 2020, OFI generated annual revenues of US$9.1 billion and EBIT of US$0.6 billion, and Olam’s 2021 Interim results have also been published today. They show a strong and resilient performance for OFI in the first six months of the year, providing the company with good momentum going into 2022.

Key highlights include H1 2021 Operational PATMI increasing 116.0 percent to US$436.6 million, its highest since inception. Reported PATMI for H1 2021 is up 26.7 percent, despite a high base a year ago from exceptional gains.

There is strong EBIT growth, with OFI EBIT up 22.9 percent and Olam Global Agri EBIT up 58.9 percent. The Board of Directors has also declared an interim dividend of 4.0 cents per share (H1 2020: 3.5 cents).

“Our strongest operational earnings since inception reflect the underlying strength and resilience of our businesses despite the impacts of COVID-19 and is a testament to the strength of our business model,” says Olam co-founder and Group CEO Sunny Verghese.

“We continue to execute our reorganization with OFI’s planned concurrent listings in London and Singapore, representing the best combination of listing venues. We are excited about the prospects of listing OFI as an attractive play for the growing demand for natural, plant-based ingredients and value-added solutions, which are sustainably sourced and traceable. Separately, we are evaluating various strategies to maximize OGA’s long-term growth potential and value enhancement within the Group as it continues with its plan for carve-out, potential IPO and demerger by H1 2023,” he says.

Olam Group’s financial performance also shows that revenue has increased 33.7 percent year-on-year, reflecting strong growth from both OGA and OFI. OGA contributed 67.8 percent of total Group revenue, OFI 29.8 percent, and OIL 2.4 percent, respectively.

Meanwhile, the Group’s CFO, N. Muthukumar, emphasizes how Olam maintains a healthy balance sheet.

“We continued to diversify funding sources and innovate on financing, including a unique two-tier AtSource-linked sustainability financing facility aggregating US$1.4 billion. We continue to make good progress on our reorganization plan and will formalize the cost plans and capital structure for OFI and OGA to meet their respective needs while driving profitable growth and improving returns,” he explains.

Headquartered and listed in Singapore, Olam currently ranks among the top 30 largest primary listed companies in terms of market capitalization on SGX-ST.

Sustainability highlights
In June, OFI began ramping up its efforts to improve environmental sustainability in its cashew supply chains to meet the boom for vegan and planet-friendly ingredients.

And before this in April, OFI reached its target of 100 percent child labor monitoring across its managed cocoa sustainability programs and 100 percent deforestation monitoring across its direct global cocoa supply chain.

The same month, OFI spiced up its portfolio with the US$950 million acquisition of Olde Thompson, a US-based private-label spices and seasonings manufacturer. The transaction builds on Olam’s long 15-year partnership with Olde Thompson and was described as a “logical move” to combine strengths.

By Gaynor Selby


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