Agri-food giant Olam divides businesses into two units, eyes listings
The global food and agri giant eyes listings for both in two to three years' time
Global food and agri company Olam International said yesterday it will reorganise its business into two operating groups with a view to spinning them off then listing them separately two to three years from now.
Olam Food Ingredients consists of the cocoa, coffee, edible nuts, spices and dairy business units, and will offer food products catering to the growing demand for healthier food that is traceable and sustainable. It will be headed by chief executive A. Shekhar, who will step down from his current role as group chief operating officer of Olam with immediate effect.
The other group, Olam Global Agri, will supply food, feed and fibre with a focus on high-growth emerging markets in Asia and Africa. It consists of Olam's grains and animal feed, edible oils, rice, cotton and commodity financial services business units. It will be led by CEO Sunny Verghese, who will also head the parent company Olam International and continue as group CEO.
Olam, which is listed on the Singapore Exchange and headquartered in Singapore, is majority-owned by Temasek.
Besides providing shared services to the two new units and exiting non-core areas, the parent company will grow Olam's packaged foods, infrastructure and logistics, and Olam Palm Gabon businesses.
Other areas it is working on include a farmer services digital marketplace, expected to be launched in the first quarter of next year, and a B2C (business-to-consumer) initiative targeted for launch late this year or early next year.
Mr Verghese told a briefing yesterday that the reorganisation allows the management teams to focus on two business units rather than 12 and to better attract talent.
He added the potential IPOs could cater to investors who want an exposure to the two distinct themes, "who will come and pay us better value because now they're not getting the businesses they don't want".
Olam will start reporting the financial results and key performance metrics of the two operating groups in its results for the first half of this year, said Mr Verghese.
It will then engage with investors and evaluate the potential sequential carving out of the two operating groups over the next 12 to 18 months, and may make sequential initial public offerings two to three years from now if key valuation and related conditions are met, he said.
He noted that the goal is not to sell off the company. "We believe that we are the best long-term natural parents and owners of this business. So we would like to own this business into perpetuity."