Singapore’s Olam To Sell Stake In Agri Unit For $1.24 Billion To Saudi Firm

Olam Group is selling just over a third of one of its business units to Saudi Agricultural and Livestock Investment Company (SALIC) for $1.24 billion, according to a statement issued on Friday.

SALIC, a subsidiary of Saudi Arabia’s Public Investment Fund, will acquire 35.4% of Olam Agri (OGA) from Singapore-listed Olam in a deal that values the unit at $3.5 billion.

“SALIC’s investment in Olam Agri is aligned with its strategy and the Kingdom of Saudi Arabia’s Vision 2030 objective for food security,” Sulaiman AlRumaih, SALIC’s Group CEO, said in a statement.

Olam said the proceeds from the sale will be used to improve its capital structure and reduce leverage. After the transaction, Olam will remain as the majority shareholder with a 64.6% share. The deal is subject to shareholder and regulatory approvals that are expected to be completed at the end of the year.

OGA is one of three operating units formed after Olam reorganized in early 2020. The company’s Olam Food Ingredients (OFI) unit, which consists of the company’s cocoa, coffee, edible nuts, spices and dairy businesses, is seeking a listing on the London Stock Exchange.

OGA is expected to go public six months after OFI. It produces food, feed and fiber such as grains, edible oils, rice and cotton. It has more than 50 manufacturing and processing facilities with a presence in 30 countries. In 2021, Olam Agri sold more than 40 million metric tonnes of goods and generated revenue of S$31.3 billion ($23 billion).

According to the latest report from Tellimer Research, Olam is expected to benefit from surging food prices as the world feels the impact of the Russia-Ukraine war. Olam’s performance is following the S&P GSCI Agriculture Index that has increased by 22% this year, and is projected to increase further.

Olam was founded in 1989 by Sunny Verghese, who was once listed among the ranks of Singapore’s 50 wealthiest people. He fell off of the list after Olam’s shares dropped in 2012.