IFC to invest in agri-commodity firm Olam to expand in India, Nigeria

Singapore-based commodities merchant Olam International Ltd is raising $175 million from International Finance Corp, the private sector lending arm of the World Bank, to finance its projects in India and Nigeria, as per a disclosure.

The proposed investment will consist of a $100 million loan facility and up to $75 million mobilisation under IFC’s managed co-lending programme, to be used for financing the approved projects in the two countries.

While part of the funding will be used for Olam's projects related to upgrade of sugar and spices production facilities in the states of Maharashtra and Kerala in India, it will also use the capital to finance flour mill expansion and up-gradation of sesame hulling units in Delta State, and Ogun State in Nigeria.

The sugar business in India is housed under Hemarus Industries Ltd. Olam had acquired Hemarus at an enterprise valuation of $73.8 million (Rs 340 crore then) in 2011. The deal involved a cash payment of $8 million and part assumption of debt of approximately $66 million.

The deal had given Olam a sugar milling facility with a capacity of 3,500 tonne crush per day (TCD) and a 20 MW co-generation facility. Olam had said back then it will further invest $6.6 million or Rs 31 crore to enhance the sugar milling capacity to 5,000 TCD.

In the same year it acquired the bulk spices and private label assets and businesses of Vallabhdas Kanji Ltd for $18 million.

It was also eyeing more acquisitions in India.

“IFC’s partnership with Olam, a company with a proven record in reaching out to challenging agricultural regions, will provide unique growth opportunities to local communities and SMEs in developing countries through better global market access for their production,” it said in the disclosure.

Olam was established in 1989 by the Kewalram Chanrai Group and operates in 65 countries, including India.

Singapore government's investment arm Temasek is the biggest shareholder in Olam with 51.4 per cent stake.

Mitsubishi Corp owns 20 per cent stake and Kewalram Chanrai Group 4.8 per cent stake in Olam. Olam’s senior management holds approximately 6 per cent, and the remaining shares are held by a number of institutional and individual investors globally.

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