Welcome to the latest edition of top stock market highlights.
Olam Group Ltd (SGX: VC2)
Olam Group, a leading food and agri-business that supplies feed, ingredients and fibre to 20,900 customers worldwide, announced that it intends to list its subsidiary, Olam Agri, as early as the first half of 2023 (1H2023).
This initial public offering (IPO) is planned for the mainboard of Singapore Exchange Limited (SGX: S68), or SGX, with a possible concurrent listing on the Saudi Exchange in the Kingdom of Saudi Arabia.
The idea of the spin-off and listing was first mooted in January 2020 when Olam International Limited (OIL) announced a reorganisation plan to simplify its portfolio.
By January last year, OIL had separated itself into three operating groups – Olam Group Ltd, Olam Agri, and Olam Food Ingredients (“ofi”).
Olam Group plans to list ofi on the premium segment of the London Stock Exchange with a concurrent listing in Singapore, subject to market conditions, but no date has been provided.
Just a month ago, Olam Group sold a 35.43% stake in Olam Agri to the SALIC International Investment Company for US$1.24 billion, thereby valuing Olam Agri at US$3.5 billion.
Olam Agri’s growth has been impressive, chalking up a 46.7% compound annual growth rate in operating profit to S$753 million in 2021.
The business has a presence in more than 30 countries, employs over 9,100 employees, and owns more than 50 manufacturing and processing facilities.
Olam Group will seek shareholder approval for the demerger and subsequent distribution-in-specie of Olam Agri’s shares to entitled shareholders.
Should Olam Agri and ofi be successfully listed, Olam Group will remain listed on the SGX with its core businesses comprising Olam Global Holdco, Olam Ventures, and Mindsprint.
Olam Global Holdco consists of gestating businesses and also holds assets marked for divestment, Olam Ventures owns technology-led new ventures, while Mindsprint is an IT and digital services business.
Singapore Post Limited (SGX: S08)
Singapore Post, or SingPost, announced the acquisition of an additional 37% interest in Freight Management Holdings Pty Ltd (FMH), taking its shareholding in the subsidiary from 51% to 88%.
The total purchase consideration for this 37% amounts to around A$175.4 million and will be funded via existing cash and loan facilities.
FMH is a 4th party logistics (4PL) service provider in Australia tapping on a proprietary technology platform to deliver integrated supply chain and distribution services.
SingPost first acquired a 28% stake in FMH back in December 2020 and subsequently increased its ownership to 51% in November 2021.
The postal group has disclosed a pathway to eventually own FMH in its entirety by the end of 2026 should it take up offers to purchase additional interests, though these may come at a higher purchase consideration at later stages.
FMH has posted impressive growth since fiscal 2019 ending 30 June 2019, with revenue doubling from A$253 million to A$524 million within three years.
Operating profit more than tripled from A$14 million to A$48 million over the same period.
This acquisition is in line with SingPost’s strategy to transform into a global logistics player, and FMH also enjoys good synergies with SingPost’s other Australian wholly-owned subsidiaries CouriersPlease (e-commerce parcel delivery service) and Quantium Solutions ANZ (e-commerce fulfillment solutions).
World Bank’s global economic forecast
In its Global Economic Prospects Report, the bank projects that growth will come in at just 1.7%, the slowest in nearly three decades, and a sharp decrease from the pace it predicted in June last year.
World Bank President David Malpass was also quoted by reporters saying that he fears the slowdown will persist.
Should inflation remain persistent and interest rates head higher, it could trigger a global recession.
The World Bank predicts that the US will grow just 0.5% this year while China will post a 4.3% expansion due, in part, to lingering pandemic-related disruptions and the bust in its real estate sector.
Microsoft Inc (NASDAQ: MSFT)
The latest ChatGPT software, developed by OpenAI, has impressed both amateurs and industry experts with its ability to churn out coherent answers to complex questions, including debugging computer code.
Microsoft is reportedly in talks to invest US$10 billion in OpenAI which will value the firm at US$29 billion.
OpenAI was founded by Sam Altman, who is currently its CEO, and Elon Musk, the CEO of both Twitter and Tesla (NASDAQ: TSLA).
Musk has since left the organisation.
Microsoft invested US$1 billion in OpenAI back in 2019 while its cloud services arm also provides the computing power used by the latter.
A recent pitch by OpenAI to potential investors hinted that the business expects to generate US$200 million in revenue this year and around US$1 billion by next year.
This could be the reason why the software behemoth is interested in taking a larger stake in OpenAI.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.