Olam explores listing agricultural arm in Singapore and Saudi Arabia

Olam Group, one of the world’s biggest agricultural commodity traders, will list its $3.5bn agricultural arm in Singapore and potentially Saudi Arabia as concerns around the war in Ukraine and climate change spur investment in food security.

The Singapore-based trader, which sold a 35 per cent stake in Olam Agri to a subsidiary of Saudi Arabia’s Public Investment Fund last year for $1.24bn, said on Tuesday that the dual listing of the company was designed to help expand its business outside of Asia.

Olam Agri is looking to raise between $800mn and $1bn for the listing in the first half of the year, according to two people familiar with the deal. The company, which supplies global brands from Nestlé to Unilever, also counts Japan’s Mitsubishi and Singaporean state investment company Temasek as its backers.

The initial public offering comes as Saudi Arabia is looking to diversify its economy away from fossil fuels into sectors including agriculture.

Climate change and the war in Ukraine are set to keep food prices at higher levels than before the Covid-19 pandemic, even as wholesale food costs have stabilised in recent months.

Chief executive Sunny Verghese on Tuesday said investors were increasingly concerned about global food security. “What the Russia-Ukraine war has brought into sharp relief is that as the world balkanizes and polarises . . . global output including food and feed production, can get upended,” he said.

Olam Agri is a supplier and processor that links farmers — particularly from frontier and emerging markets in Asia and Africa — with global brands.

The listing is part of a reorganisation of the Singapore-listed Olam Group to split into three new entities. Verghese said there was no change to the plan to list its food ingredients business on the London Stock Exchange with a secondary listing in Singapore. The executive said it would happen after the Olam Agri listing was completed and when market conditions improved.

Nirgunan Tiruchelvam, head of consumer and internet research at Aletheia Capital, said: “Efforts to spin off [the Olam Agri] business ticks boxes in a world where people [are] valuing food security and high environmental, social and governance standards.”

The company is “viewed as proxy for commodity or food prices going up,” he said, though he added that a number of global investors were not set up to trade in the Saudi stock market.

“The Saudis have been investing in the business for a while, and it fits into the government’s plans to diversify and get exposure to businesses that are ESG-friendly but also serve its specific interests,” he said.

In response to questions about why it was pursuing a primary listing in Saudi Arabia as well as Singapore, Verghese said the Saudi exchange raised a lot of money in 2021 and 2022, making it an exception to other global equity markets last year.

“As the first foreign company to list there, we can tap into this additional incremental discrete pool of new capital,” he said.