Oran International Co., Ltd. update
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Oran International has chosen London for an initial public offering of its multi-billion pound food ingredients business because the Singapore-based agricultural trading company hopes to capitalize on investors’ growing interest in healthy eating and nutrition.
The company said on Friday that Oran Foods is seeking a high-quality listing on the London Stock Exchange in the first half of next year and a secondary listing in Singapore.
This decision is a boon for the British market, which lags behind international competitors in the struggle to attract the largest and brightest companies.
Based on the valuation of competitors’ food ingredients business, OFI may be large enough to occupy a place in the blue-chip FTSE 100 index. To qualify, OFI needs to be valued at more than £4 billion and pass nationality and liquidity tests.
“With OFI’s current scale and scale, we believe this will be a reasonable scale listing,” said A Shekhar, CEO of the division. The company will set up dual headquarters in London and Singapore.
OFI is one of the world’s largest suppliers of cocoa beans, onions and garlic, coffee and almonds, with pre-interest profits of S$800 million (US$600 million) and sales of S$12.5 billion last year. It has 15,000 employees, operates more than 100 manufacturing plants, and purchases goods from 2.6 million farmers worldwide.
Last year, Olam decided to split itself into a business focused on food ingredients such as cocoa, coffee, nuts and spices, and another focused on grains and oilseeds, cooking oil, rice and cotton.
The idea behind this move is to create two more focused companies and release value from Oran’s complex corporate structure. The share price of Olam, which trades in Singapore, has remained flat in the past year. Another business unit-Olam Global Agri-is expected to seek a listing six to 12 months after OFI begins trading in London.
The legal separation of OFI should be completed by the end of the year.
Shekhar said that London has been free from competition from other European exchanges because of its large and diverse investor base and “in-depth knowledge” of the food and beverage industry.
“We feel the combination of the main listing in London, where the business is well understood… and a secondary listing at the same time will be a good combination,” he said.
In addition to going public, OFI will also seek to raise funds to support its growth plans. Olam last year acquired Olde Thompson, the largest private label fragrance supplier in the United States. In a billion-dollar transaction
“OFI is a growth company. We see a lot of opportunities,” Shekhar said.
OFI will be spun off from Olam in particular Shares will be distributed to existing shareholders at the same time as the London IPO.
Olam is majority-owned by Temasek Holdings, an investment company backed by the Singapore government, which holds 53.2% of the shares. Its other major shareholder is Mitsubishi Corporation of Japan, which holds 15% of the shares.
Shekhar said that as consumers are interested in health, taste and sustainable food sources, both shareholders support the split.
With the existence of the entire supply chain from production to trade and manufacturing, OFI can well respond to the ever-increasing demand for traceable products.
“Sustainable and traceable food is a trend,” Shekhar said. “The other big trend is health, nutrition and well-being. Look at nuts and the protein and fiber they provide, or the flavonoids or antioxidants in coffee.”
Shekhar said that OFI’s capital structure has not yet been determined, which will determine how much debt the company assumes and its dividend policy. The company is still in the process of determining the board of directors and independent chairman.