Asian food giant and commodity trader Olam International announced it will reorganize itself into two new operating businesses: Olam Food Ingredients, and Olam Global Agri.
The decision follows a multi-year business plan from early 2019 that invested $3.5 billion into new and emerging growth areas while divesting from other sectors.
Olam International is headquartered in Singapore and is one of the biggest suppliers of coffee, cotton, and rice and serves around 23,000 customers globally, operating in 70 countries with a strong presence in Asia and Africa.
The agribusiness’ Olam Food Ingredients line will capitalize on consumers’ growing demand for natural, healthy and sustainably-sourced food products. The ingredients will be sourced from its already existing commodity portfolio of cocoa, coffee, edible nuts, and spices.
Its second branch, Olam Global Agri, will provide food and feed to high-growth Asian and African countries whose dietary habits are changing. This is due to a growing middle class whose eating habits are shifting from carbohydrate cereals to food rich in fats and protein.
“Over the past 30 years, Olam has built a valuable portfolio of businesses that have achieved leadership positions. By simplifying our businesses across two distinct and coherent groups, each with a clear vision for profitable growth, it sharpens our focus and provides opportunities to capitalize on key market trends, while continuing to leverage the benefits of the Olam Group,” said co-founder and group CEO, Sunny Verghese.
In addition, Verghese states the company hopes simplifying its portfolio will offer an opportunity to attract new investors which could later lead to an official carve-out of the two businesses as well as a public listing to accelerate profits.
“We believe this will enable us to explore potential carve-outs and IPOs in a sequential manner and attract additional investors who are aligned with the vision of these two new groups in order to maximise the value of our business,” he said.
In the meantime, Olam will provide updates to stakeholders on developments, changes and financial reporting as it works to divide its business. The potential listing of either division could take anywhere between 24- 36 months.