Treasury at Singapore’s Olam Group, one of the world’s biggest agricultural commodity traders, is being overhauled as the company prepares two sequential IPOs in Riyadh and London. Group Treasurer Jayant Parande explains the scale and size of the transformation underway.

Preparing to IPO is a complex task for treasury. As Singapore’s food and agri-business Olam Group prepares to split into two separate entities and lays the groundwork for two sequential IPOs, the treasury team have been hard at work.

The listings are the fruition of a transformational restructuring at the company. Olam Group has been adding value to the commodities it grows, originates and supplies around the world for years by manufacturing ingredients that it then sells to global food companies. Today, this arm of the business has grown large enough to stand on its own, and for the last two and half years the company has been steadily carving out two separate entities, Olam Food Ingredients (ofi) and Olam Agri, which will remain focused on growing, processing and trading commodities.

These distinct divisions are now seeking to IPO, led by Olam Agri which recently announced it is targeting a Singapore and Riyadh dual-listing in the first half of 2024. ofi, which will list in London and Singapore, will follow suit on a sequential basis based on prevailing market conditions.

“No international company has done this before,” enthuses Jayant Parande, Managing Director, Global Head – Treasury & TSF (Group Treasurer) at the company where he has worked in treasury for over 25 years and was part of the team involved in Olam Group’s initial IPO in Singapore in 2005. “What’s different this time is the scale and size of the transformation.”

Key tasks

One of the key tasks for the treasury team has involved separating out Olam Group’s debt portfolio between the two new entities. “We have had to make sure the debt is domiciled in respective operating entities,” he explains in an interview with Treasury Today from the company’s Singapore office.

Olam Group’s diverse debt portfolio rests with multiple banks; it also comprises bond issuances, sustainability-linked offerings, DFI-linked loans and trade finance facilities which had to be re-organized under ofi and Olam Agri umbrellas. The process requires consent from each lender and has also involved securing a bridge finance facility from a group of banks to cover any obligations should one of the lenders not consent to the move. “We have had to make sure the entire portfolio is where it needs to be,” he explains.

As the IPO process starts to gather momentum, the treasury team’s primary focus remains managing the global banking position and aligning the diverse group of lending institutions to the strategic focus of the company. Olam has a group of around 30 global banks comprising co-relationship banks alongside others who support the group across multiple touchpoints like FX, trade finance, working capital and derivatives.

Alongside the IPO, Olam Agri will demerge from Olam Group to ensure it can tap the full benefits of the valuation. Olam Group will not hold a stake in either of the future companies to ensure the maximum value from the IPOs, explains Parande. It means the treasury team has had to also work through two consent processes for approval for two demergers – both of which have been successfully completed.

Treasury operation

The company’s treasury operation is run almost entirely in-house with tech-heavy processes. “We are fairly advanced in terms of automation and processes and sophisticated in terms of having host-to-host connectivity and payment factories that reduce manual work to a bare minimum,” he says.

The front office team in Singapore is supported by Olam’s Global Business Services teams based in Chennai, responsible for routine treasury procedures like remittances, receipts, collections, as well as accounting and reconciliations. “This has significantly added value in terms of upscaling the quality of work the treasury team does,” he says. The implementation of a treasury risk management (TRM) system over the last two years has further strengthened treasury operational effectiveness.

On top of this, each of the operating companies also have strong country finance teams who handle all local operational treasury activities as well as local banking relationships.

The other key element of the IPO process has involved splitting the treasury teams into two separate entities. ofi and Olam Agri now have independent senior treasury teams based out of Singapore focused on managing bank and lender relationships and diversification of the overall debt portfolio. Parande concludes that in the near term, treasury for both groups will remain run out of Singapore.