Olam delays big London IPO of food ingredients unit, cites market conditions

By Anshuman Daga and Indranil Sarkar

SINGAPORE (Reuters) -Commodity trader Olam Group has delayed the planned second-quarter London listing of its food ingredients unit, a deal sources had said could raise about GBP 2 billion ($2.64 billion), citing market volatility amid the war in Ukraine.

Singapore-based Olam’s shares skidded 6% after the unit, Olam Food Ingredients (OFI) said on Thursday it does not currently expect its initial public offering (IPO) to take place in the second quarter, as previously anticipated, given market conditions. (https://bit.ly/3wvvd4W)

“This is clearly not positive but not unexpected given that Russia and Ukraine are among the largest global wheat producers, besides other products,” said Justin Tang, head of Asian research at investment advisory firm United First Partners.

The IPO by Olam’s unit would have ranked as one of London’s largest issues in recent years.

Globally, many companies have delayed debt and equity fundraising plans amid volatile markets since the Russia-Ukraine crisis as investors worry about the impact of soaring inflation, rising interest rates and weaker economic growth.

“We remain committed to pursuing a public listing of the business,” OFI said, adding that the timing was subject to market conditions.

It spelt out the delay in the IPO in a statement announcing the appointment of three non-executive directors.

Olam, one of the world’s biggest agricultural commodity traders, is listing OFI as part of a business overhaul flagged in 2020, under which it created two new core operating groups.

The company, which counts Singapore state investor Temasek Holdings and Japanese trading house Mitsubishi Corp, among its backers, is seeking to simplify its complex portfolio and boost valuations.

Olam had also planned for a secondary listing of OFI in Singapore in the first half of 2022.

OFI’s portfolio includes cocoa, coffee and edible nuts, while the other unit, Olam Global Agri, comprises grains, edible oils, rice and cotton businesses, among others.

(Reporting by Anshuman Daga in Singapore and Indranil Sarkar in Bengaluru; Editing by Shounak Dasgupta and Kenneth Maxwell)