Olam Group believes its current share price does not reflect its true or intrinsic value, according to the company’s responses to shareholder questions ahead of its extraordinary general meeting (EGM) on July 4. These questions were submitted by June 26. As of June 27, Olam’s shares closed at 94.5 cents.
The company attributes the share price discount to several factors, including a conglomerate or multi-business discount and a limited free float. The latter has also led to reduced analyst coverage and ineffective price discovery.
“To address these issues, we believe listing ofi as a pure-play, standalone entity or attracting new investors through private markets could help close the valuation gap,” said Olam. This strategy is part of a broader plan that includes the sale of Olam Agri and the monetisation of remaining assets.
Olam emphasized that a simultaneous sale of all assets to one buyer is not feasible. Instead, the company plans to divest progressively, allowing it the flexibility to pursue both public and private capital-raising options for ofi, depending on market conditions.
While the IPO timeline for ofi remains unclear due to regulatory factors, Olam reiterated its earlier disclosure from April 20 that it expects to invest US$500 million into ofi within three to four months. “This capital infusion provides the flexibility to pursue strategic initiatives, such as a potential dual listing in Europe and Singapore,” the company said in its June 29 update.
Olam pointed to the case of Olam Agri, where it unlocked value via a private transaction after regulatory delays hampered IPO plans, as an example of this flexible approach. The company pledged to keep shareholders updated on ongoing IPO and capital-raising efforts.
Olam Agri Sale and Currency Considerations
Regarding the sale of Olam Agri and its proceeds being in U.S. dollars, Olam acknowledged the recent USD depreciation against the SGD (from 1.32 to 1.28), resulting in a potential difference of about $70 million. However, the group noted that its functional and reporting currency is USD, and exchange rate fluctuations only affect the SGD-reported figures for statutory purposes. There is no actual loss in value, and gains will reverse if the USD strengthens again. The company also maintains hedges for significant SGD liabilities, such as perpetual securities maturing in 2026.
Leadership Changes
In response to questions about the stakes of Sunny Verghese and N. Muthukumar in Olam Agri, the company clarified that their holdings are independent of their roles within Olam Agri. Verghese, who owns 4.5% of Olam, will step down as group CEO and executive director but remain a non-executive board member. Muthukumar, who holds 2.2 million shares, will step down as group CFO.
Olam added that its next group CEO will be tasked with driving value through responsible divestment of the remaining group businesses.
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