[SINGAPORE] Olam Group will invest US$500 million equity into Olam Food Ingredients (ofi) within the next three months, while de-leveraging the remaining Olam group for progressive liquidation, as part of its reorganisation plan amid the disposal of Olam Agri.
The US$500 million investment, funded by internal resources, is aimed to “position ofi to pursue profitable growth” so that Olam can resume the delayed ofi initial public offering (IPO) plans in both Europe and Singapore, said Olam’s chief executive officer Sunny Verghese in a press conference on Monday (Apr 14).
The agri-business giant, which announced its divestment plan of the main profit-making unit — Olam Agri — in February, is also open to private routes to unlock value from ofi.
Meanwhile, Olam will re-initiate share buy-backs after renewing its share buy-back mandate in the upcoming annual general meeting on Apr 25.
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Monetising remaining Olam group
Olam will allocate about US$2 billion to de-leverage the balance sheet of the remaining Olam group, one of the three operating groups carved out in an early restructuring completed in 2022.
After making the unit debt-free and self-sustainable, Olam will “responsibly divest” all of its assets and businesses over time, and distribute the net proceeds to shareholders via special dividends.
The proceeds from the disposal of Olam Agri, estimated at US$2.6 billion gross, will finance the plan.
However, Verghese noted that it is hard to predict either the timeline or target valuation of the divestment of the 10 assets and businesses under the remaining Olam group.
“But what we want to clarify is that there will be no fire sale of these assets… we have already initiated a process of finding the right long term owners of these businesses,” he added.
As of end-2024, the remaining Olam group comprised of about US$2 billion invested capital. “We expect to get the fair value from these businesses after we have restructured the business and made that entire business debt free,” noted Verghese.
On what would happen to the listed parent company once remaining Olam group is divested and ofi is public separately, Verghese said that Olam will update as the situation progresses given the limited predictability.
“It is a function of a lot of factors, some of which are in our control, a lot of which are not in our control… when there is any material development, we will keep you informed,” he noted.
Shares of Olam jumped 6.5 per cent, or S$0.055, to S$0.905 on a cum dividend basis as of 2pm on Monday.
