Olam To Form 50/50 Joint Venture In Canada
Olam International has announced its proposal to form a 50/50 joint venture in Canada with independent US-based commodity merchandising firm, Lansing Trade Group. The joint venture, Lansing Olam Canada, will look to originating and merchandising Canadian grains and oilseeds to meet the food and feed demand in North America as well as international markets. In a statement released on 13 June 2012, the partners said that the joint venture will combine the global market presence, captive consumption and customer relationships of Olam with the North American merchandising skills and experience of Lansing. The statement also mentioned that the complementary fit will provide a strong platform to establish a meaningful position in the liberalised Western Canada Grains market place. KC Suresh, president and global head of Olam’s grains business said that Olam’s in-house milling demand in Africa will be able to provide leverage for the joint venture to exploit. Lansing Olam Canada is expected to commence operations in July 2012.
Significance: The venture into Canada is a likely attempt by Olam to diversify its revenue streams as it tries to mount a comeback from its recent dismal quarterly performance. However, any contribution from the venture will only have an impact in Olam’s FY13 performance.
Orchard Parade To List Hospitality Assets Into Trust
Orchard Parade Holdings (OPH) has proposed injecting its three hospitality assets into a hospitality trust which will be listed on the Singapore Exchange. OPH intends to inject Orchard Parade Hotel, Albert Court Village Hotel and Central Square Village Residences in its proposed Far East Hospitality Trust. The total consideration for the injection is expected to be at least $702 million. At the same time, OPH intends to acquire the hospitality management business of Far East Organization and selected healthcare properties. These include the acquisition of 45 units of medical suites in Novena Medical Centre, 48 units of medical suites in Novena Specialist Centre. In connection with the proposed restructuring, OPH has also proposed a special dividend and dividend in specie to its shareholders.
Significance: While the listing of OPH’s hospitality assets will unlock value for shareholders, the diversification into the healthcare business is seen as an opportunity for OPH to participate in the growing healthcare industry in Singapore.
Maxi-Cash To Seek Catalist Listing
Pawnbroker Maxi-Cash Financial Services Corporation is seeking to be the first pawnbroker to seek an initial public offering (IPO) in Singapore. The launch of its IPO will offer 56 million new shares at $0.30 apiece. Maxi-Cash is a subsidiary of mainboard-listed jewellery retailer and property developer, Aspial Corporation. Aspial will continue to be Maxi-Cash’s controlling shareholder with 81.1 percent of the shares. Maxi-Cash anticipates reaping in net proceeds of around $15.1 million from the IPO. The firm intends to use the funds to help with business growth and to create brand recognition and trust. Koh Wee Seng, chairman of Maxi-Cash said that loan growth has been healthy, with people borrowing to meet household expenses, short-term cashflow problems, and borrowing for education and medical needs. Maxi-Cash also said that it intends to pay 60 percent of net profit this year as dividend.
Significance: Maxi-Cash has joined the IPO crowd that has swelled SGX’s pipeline of late. However, investors should note that the IPO is being priced at 25 times historical earnings and that rising rental costs and non-renewal of leases present important risk factors to the business.