Noble Group to list agriculture business

SINGAPORE: Singapore-listed commodities firm Noble Group is seeking to list its agriculture business, which accounts for a third of its earnings and may have a value of more than US$5 billion (RM15.9 billion).

The company, which wants to list the business on the Singapore Exchange, said late Tuesday the process will be subject to market conditions. JPMorgan is advising Noble on the planned listing, two sources with knowledge of the deal said yesterday.

JPMorgan and Noble declined to comment on who is advising the company or the size of the deal. Shares of Hong Kong-based Noble jumped as much as 5.8 per cent yesterday, their biggest intra-day jump since August 31.

Noble, which counts sovereign wealth funds China Investment Corp and Korean Investment Corp among its shareholders, has a market value of about US$6 billion. Its shares have suffered this year from a selloff in companies that trade industrial commodities.

"We believe a spinoff makes sense to further avoid the structural de-rating that has defined the commodities trading sector this year," UBS analyst Andreas Bokkenheuser said in a note to clients.

Nomura said the equity value of the business could be more than US$5 billion and even at current valuations, it should have a value of US$3.3 billion. "We believe it may be good for valuations, as agri-assets and traders/processors generally command a higher valuation as compared to non-agri portfolio," it said in a note.

Noble has a price-to-earnings ratio of around 8, below rival Olam's 10.8, which benefits from a premium due to its focus on largely agriculture commodities. Noble's agriculture business is primarily made up of soyabean crushing in Argentina, Brazil and China, sugarcane mills in Brazil as well as other businesses such as cotton, coffee, cocoa and other grains.

Noble shares have been hurt this year because the company trades a lot of cyclical commodities such as iron ore and aluminium. Its shares had fallen about 44 per cent, more than the 21 per cent drop in the Singapore market, based on Tuesday's close. - Reuters

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