Olam Group has revealed plans to invest $500 million in its food ingredients unit and sell its other businesses and assets over time.
The group revealed Monday, noting that the state investment company Temasek, which is its largest shareholder, plans to allocate $2 billion to repay the debts of its remaining businesses and make them self-sustaining before selling them.
Olam said the plan took into consideration the need to strengthen its balance sheet and the resilience of its operating groups “in the face of unprecedented macroecconomics uncertainties including tariffs.”
Commodities ranging from coffee to cocoa have experienced volatile prices alongside global markets amid the economic uncertainty triggered by Donald Trump, the United States president.
“Agricultural commodities will be subject to tariffs between the countries concerned, and particularly between the U.S and China,” said Sunny Verghese, Olam’s co-founder.
Read also: Olam Agri closes $1.8bn sale to Saudi as shares jump
“But we believe that given the broad nature of production from multiple countries and the broad nature of consumption of demand also emanating from multiple countries, the impact on this, as we have seen in Trump 1.0 is quite minimal during this period,” Verghese, who is alos the group chief executive officer, added.
Olam will use the estimated £2.58 billion it receives from the sale of its stakes in Olam Agri to Saudi Arabia’s agricultural and livestock investment firm, SALIC, along with the proceeds from future divestments for the resconstructuring.
The equity investment in Olam Food Ingredients (OFI) will allow the company to explore options, including a potential concurrent listing in Europe and Singapore, Verghese said.
According to him, the timing of the listing is subject to the performance of OFI and market conditions, including the geopolitical situation.
Olam also plans to resume share buybacks and progressively distribute proceeds from the sale of its other assets to shareholders via special dividends.
