PIF unit Salic acquires 35.4% stake in Singapore's Olam Agri in $1.2bn deal

Saudi Agriculture and Livestock Investment Company (Salic), a subsidiary of the kingdom's Public Investment Fund, acquired a 35.4 per cent stake in the agribusiness unit of Singapore-based commodity trader Olam Group for $1.2 billion.

The transaction implies an equity valuation of $3.5bn for Olam Agri, creating a “strong shareholder base for a potential future listing and [its] demerger”, Olam Group said in a statement.

Proceeds from the deal will be used to repay the debts of Olam Group, help in “right-sizing” its capital structure and reduce leverage, it said.

Olam Group will remain the biggest shareholder in its agribusiness unit after the deal, with a 64.6 per cent stake.

The transaction is expected to be completed this year, subject to regulatory approval, Salic said in a separate statement.

“Our partnership with Olam will expand Salic’s international footprint and increase access to strategic commodities,” said Sulaiman Al Rumaih, Salic's group chief executive.

“Salic will leverage its international investments and local portfolio companies to strengthen its position across the agri-food value chain as a global food security player.”

Established in 2012, Salic plays a pivotal role in the kingdom's Vision 2030 plan through its international investments to improve food security in the Arab world's largest economy.

Last year, the PIF transferred its holdings in dairy company Almarai, the National Agricultural Development and Saudi Fisheries to Salic, further bolstering its portfolio.

Salic also established a joint venture entity, the National Grain Company, with Saudi shipping company Bahri to build and handle a $110 million grain terminal at Yanbu Commercial Port in the kingdom.

“Salic’s investment in Olam Agri is aligned with its strategy and … Saudi Arabia’s Vision 2030 objective for food security,” said Mr Al Rumaih.

“Olam has demonstrated continuous financial growth, as well as [an] increasing global food security contribution, with a strong presence in grains and diversified products.”

Olam Agri’s “commercial success, expertise, scale in key commodity sourcing and processing will add significantly to Salic’s international portfolio.”

Olam Agri is a commodity trading and processing company that specialises in grains, oilseeds, rice and animal feed. The company employs more than 9,100 employees across 30 countries.

In 2021, Olam Agri handled more than 40 million tonnes of products and its revenue exceeded $23bn.