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Olam creates two new operating groups
AGRI-FOOD giant Olam International is reorganising its businesses into two operating groups focusing on food ingredients and global agri-business.
This is to simplify its diverse portfolio, allow for potential carve-outs or initial public offerings (IPOs) of the operating groups, and accelerate profitable growth, Olam said on Monday in a regulatory update.
Olam Food Ingredients (OFI) will consist of Olam's cocoa, coffee, edible nuts, spices and dairy businesses. It will be led by A Shekhar who has been appointed as OFI's chief executive officer (CEO) and will step down from his current role as Olam's group chief operating officer with immediate effect.
Olam Global Agri (OGA) will comprise the group's grains and animal feed, edible oils, rice, cotton and commodity financial services businesses. OGA has built proprietary operating capabilities in global origination, processing, trading, logistics, distribution, farming and risk management.
Sunny Verghese will helm OGA as its CEO, in addition to continuing his current role as Olam group CEO.
The reorganisation is part of the group's new strategic plan for fiscal 2019 to 2024, and comes on the recommendation of its two financial advisors, Credit Suisse and Rothschild, appointed in May 2019.
As the parent company, Olam will provide stewardship to OFI and OGA. It will also provide shared services to both operating groups to "optimise synergies", Olam said.
Businesses that will stay within Olam are packaged foods, infrastructure and logistics, and Olam Palm Gabon. As an accelerator, Olam will nurture these "gestating businesses", while also incubating new engines for future growth, it noted.
Olam will also manage the divestment of non-core assets and businesses identified in its strategic plan, and redeploy capital for future growth.
Shares of Olam closed at S$1.94 on Friday, down one Singapore cent or 0.5 per cent.