Olam has the potential to break into the FTSE 100 by listing its food ingredients unit
Olam International is weighing up the possibility of a London listing of its food ingredients unit for next year which would allow the company to raise £2bn.
The company confirmed on Friday that Olam Food Ingredients was looking at a premium listing on the London Stock Exchange, in addition to a secondary listing in Singapore during the first half of next year.
“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. However, he did not reveal a fundraising target at this stage.
“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 added.
The decision is welcome news for the UK market, which has been seen to be struggling to attract the biggest companies.
Olam Food Ingredients has the potential to break into the FTSE 100 based on the valuations of rival food ingredients firms.
Commenting on Olam picking London for its premium IPO, Mark Lynch, Partner at corporate finance house, Oghma Partners, said: “The listing of Olam ingredients in the UK is a vote of confidence in the London Equity market and reflects, amongst other things, its deep pool of liquidity.”
“Assuming that the Company does qualify as a UK Food Manufacturer, it provides a significant boost to the sector that has lost many former FTSE companies over the last twenty years including, Cadbury Schweppes, United Biscuits, Hillsdown Holdings, Albert Fisher, Northern Foods and Unigate. Importantly it also offers investors a route into the changing world of food ingredients which is seeing an expansion in its opportunities through the growth in demand for plant based foods, plus expanding Ag Tech and Food Tech applications and the focus of consumers and clients on traceability and sustainability.”