Olam Group considers sale of agri-business unit to Saudi investment firm SALIC

SAUDI ARABIA – Olam Group, a global food and agribusiness giant headquartered in Singapore, has confirmed that it is in preliminary talks with the Saudi Agricultural and Livestock Investment Co. (SALIC) regarding a potential sale of its agri-business segment, Olam Agri.

The discussions come in response to a nonbinding offer from SALIC, which is fully owned by Saudi Arabia’s Public Investment Fund (PIF).

Following the announcement, Olam’s shares surged by 17% during afternoon trading, marking a significant market response to the news.

SALIC already holds a 35.43% stake in Olam Agri after a US$1.24 billion investment made in 2022, a deal that valued the business at approximately US$3.5 billion.

Since then, SALIC has aimed to bolster Saudi Arabia’s food security as part of the nation’s Vision 2030 initiative, which seeks to reduce import dependency and strengthen food supply chains.

Olam Agri, with a 2023 revenue of over US$23 billion, is a leading supplier of grains, oilseeds, animal feed, rice, and edible oils across more than 30 countries​

Olam has been restructuring its portfolio in recent years, aiming to optimize value through strategic listings. The company initially announced plans for an IPO and concurrent demerger for its food ingredients and agricultural units in 2021.

However, market volatility led the company to delay these plans, with analysts suggesting that a successful sale to SALIC could replace the need for an IPO for Olam Agri altogether.

Earlier reports indicated that if the sale proceeds, Olam could withdraw plans to list Olam Agri on the Saudi Exchange, a move previously viewed as essential to its restructuring efforts​

The potential sale aligns with broader trends in sovereign investment in agribusiness, where Gulf state-owned funds have pursued stakes in agriculture, food production, and distribution to ensure regional food security.

For Olam, such a transaction could generate substantial capital, enabling it to concentrate on its other core segment, Olam Food Ingredients, which supplies essential commodities like cocoa, coffee, and spices to markets worldwide.

Olam has highlighted its commitment to remaining flexible in its strategic options, stating that it will continue to monitor conditions impacting its IPO decisions for both its food ingredients and agri-business units​.

Sign up to receive our email newsletters with the latest news updates and insights from Africa and the WorldHERE.