Olam to focus on food ingredients business, sell the rest
Sign up now: Get ST's newsletters delivered to your inbox
Olam Group will invest US$500 million in its food ingredients business and divest all remaining businesses and assets over time.
PHOTO: BLOOMBERG
SINGAPORE - Singapore-based food and agri-business conglomerate Olam Group said on April 14 it will invest US$500 million (S$657 million) in its food ingredients business and divest all remaining businesses and assets over time.
The commodity trader, which counts Singapore’s investment company Temasek as its largest shareholder, also said it plans to allocate US$2 billion to repay the debts of its remaining businesses and make them self-sustaining, before pursuing their sale.
Olam said the plan took into consideration the need to strengthen its balance sheet and the resilience of its operating groups “in the face of unprecedented macroeconomic uncertainties, including tariffs”.
Commodities ranging from coffee to cocoa have experienced volatile prices alongside global markets amid the economic uncertainty triggered by US President Donald Trump’s tariffs and policy orders.
“Agricultural commodities will be subject to tariffs between the countries concerned, and particularly between the US and China,” Olam’s co-founder and group chief executive Sunny Verghese said in a briefing on April 14.
“But we believe that given the broad nature of production from multiple countries and the broad nature of consumption or demand also emanating from multiple countries, the impact on this, as we have seen in Trump 1.0, is quite minimal during this period.”
Olam will use the estimated US$2.58 billion it receives from the sale of its stake in Olam Agri to Saudi Arabia’s agricultural and livestock investment firm Salic, along with the proceeds from future divestments, for the restructuring.
The equity investment in Olam Food Ingredients will allow the company to explore options including a potential concurrent listing in Europe and in Singapore, it said.
Mr Verghese said the timing of the listing is subject to the performance of Olam Food Ingredients and market conditions including the geopolitical situation.
Olam also plans to restart share buybacks and progressively distribute proceeds from the sale of its other assets to shareholders via special dividends.
In 2022, the company delayed a planned London listing for the food ingredients unit, citing market volatility amid the war in Ukraine.
Its remaining businesses include start-ups incubator Nupo Ventures, technology and business services firm Mindsprint and Olam Global Holdco, which owns the group’s non-core assets such as Olam Palm Gabon and Packaged Foods, its website showed.
Shares of Olam rose 4.7 per cent to 89 cents on April 14, outperforming the 1.04 per cent rise in the benchmark Straits Times Index. REUTERS
