* Olam says OFI could join London's FTSE-100 index
* Also seeking secondary listing for OFI in Singapore
* OFI could be listed by Q2 2022, OGA would follow
* Olam CEO says listing to help firm step up M&A
SINGAPORE, Aug 13 (Reuters) - Olam International
is considering raising about 2 billion pounds ($2.8 billion)
through a London listing of its food ingredients unit next year,
sources familiar with the matter said on Friday, as the
Singapore-based trading house seeks to boost its valuation and
step up acquisitions.
The company, one of the world's biggest agricultural
commodity traders, is listing Olam Food Ingredients (OFI) as
part of a business overhaul flagged last year https://www.reuters.com/article/olam-intl-restructuring-idUSL4N29O16P
to focus on the two core businesses of OFI and Olam Global Agri
(OGA) after the sale of sugar, rubber and other portfolios.
"It will be a substantial IPO. It will be amongst the larger
IPOs done on the London Stock Exchange (LSE) in the recent
past," co-founder and CEO Sunny Verghese told Reuters in an
interview, while declining to give a fundraising target.
The proceeds would allow OFI to accelerate growth and also
accelerate acquisitions, he added.
"One of the reasons that we are doing this exercise of
re-organising is to make sure that we can focus and simplify a
fairly diverse complex portfolio," Verghese said
Singapore state investor Temasek Holdings became
Olam's controlling shareholder in 2014 https://www.reuters.com/article/us-olam-temasek-idUSBREA2C2EW20140314
after the trader's accounting practices were questioned by
short-seller Muddy Waters in 2012. Mitsubishi Corp
became a shareholder in 2015.
"London being a major financial centre has no lack of
liquidity and more importantly has investors who know how to
price these things correctly," said Justin Tang, head of Asian
research at United First Partners in Singapore.
OFI's portfolio includes cocoa, coffee and edible nuts,
while Olam Global Agri (OGA) comprises grains, edible oils, rice
and cotton, among others.
OFI and OGA's competitors include privately-held Louis
Dreyfus, Swiss-listed Barry Callebaut and
Archer-Daniels-Midland, some of whom have revamped their
businesses amid stiff competition.
Olam's shares, which have a small float, ended up 2.8% on
Friday, valuing the company at S$5.5 billion.
Verghese said OFI could join London's FTSE-100 index
of blue-chip companies.
A valuation above 4 billion pounds would enable OFI to get
into the index and obtain a premium listing - which would
require the company to have a free float of at least 25% and
meet a tougher set of corporate governance requirements.
Winning OFI's listing would be a boon for the LSE, which is
trying to attract more global companies following Britain's exit
from the European Union.
Olam has said it is seeking a concurrent secondary listing
in Singapore for OFI by the first half of 2022.
Two of the sources said Olam had appointed Citigroup, Credit
Suisse, HSBC, JPMorgan and Morgan Stanley to work on OFI's IPO.
Four of the banks declined to comment, while there was no
response from Morgan Stanley.
Verghese said OFI's IPO could be completed by the second
quarter of next year, and OGA could be listed as early as the
fourth quarter of 2022.
On Friday, Olam reported a more than doubling of first-half
operational profit, excluding exceptional items, to a record
S$436.6 million ($321.5 million)
($1 = 0.7242 pounds)
(Reporting by Anshuman Daga and Aradhana Aravindan
Editing by Mark Potter and Elaine Hardcastle)