By Guillermo Parra-Bernal and Tatiana Bautzer, Reuters via Nasdaq
SAO PAULO, March 15 (Reuters) – Brazil’s BRF SA is analyzing other options instead of an initial public offering for halal food unit One Foods Holdings Ltd, and has engaged in talks for a private stake sale to sovereign wealth and buyout funds, four people familiar with the plan said on Wednesday.
Momentum for One Foods’ IPO has lost steam in recent weeks in the light of parent company BRF’s management mishaps that led to disappointing fourth-quarter results, and competition from other upcoming Middle East-related capital markets transactions, the people said.
Reuters reported on Jan. 5 that BRF, the world’s largest poultry exporter, wanted to raise $1.5 billion from the One Foods IPO, which may take place by early April. The company confirmed a day later it was studying the IPO in London and also gauging a possible private placement.
According to one of the people, sovereign wealth funds Qatar Investment Authority and the Abu Dhabi Investment Authority have signaled they would be more willing to participate in a private placement of stock than an IPO at this point.
Two of the people said a private placement would help increase the value of One Foods, which is estimated to be around $6.5 billion. BRF hired the investment-banking units of Bank of America Corp and Morgan Stanley & Co to underwrite the IPO, with Citigroup Inc acting as an adviser.
The situation highlights the extent of turmoil inside BRF, which has in recent weeks shown the door to a number of top executives. Failing to clinch a deal for One Foods risks slowing Chairman Abilio Diniz’s efforts to expand BRF’s halal operations across the Middle East and Muslim Asia.
Citigroup is leading the private placement effort, two of the people said. Private equity funds have also been approached for the private placement deal, the people said.
São Paulo-based BRF and the Abu Dhabi fund declined to comment, as did Morgan Stanley and Bank of America. Citigroup and QIA, as the Qatar wealth fund is known, did not have an immediate comment.
The people asked for anonymity to discuss the issue freely. Some aspects of the talks are confidential.
BRF wants proceeds from the sale of the One Foods stake to help propel the latter’s expansion into Asian Muslim nations. One Foods has 10 plants and 15,000 employees, and already controls 45 percent of the poultry market in Saudi Arabia, United Arab Emirates, Kuwait, Qatar and Oman.
One Foods was formally launched as a standalone company in January, underscoring BRF’s wish to expand in the halal meat segment independently from other regions. The market for meat cuts that comply with Muslim dietary rules is expected to grow to $60 billion by 2020.
ARTICLE TWO – 4 JANUARY 2017
Brazil’s BRF renames Sadia Halal to One Foods Holdings to focus on Muslim food markets
By Paula Arend Laier, Reuters
SAO PAULO Jan 4 (Reuters) – Brazil’s BRF SA has launched a unit focused on the Muslim processed foods market, underscoring efforts by the world’s No. 1 poultry exporter to gain market share in the oil-rich Middle East.
In a Wednesday (4/1/17) securities filing, BRF said the Dubai-based unit has been renamed One Foods Holdings Ltd, from Sadia Halal, with the goal of building market share in the region.
The board of BRF in June approved the creation of One Foods, which was launched earlier this week. In November, BRF said it had hired banks to help bring investors into One Foods, which operates 10 plants and has 15,000 employees.
According to BRF, One Foods controls 45 percent of the poultry market in Saudi Arabia, the United Arab Emirates, Kuwait, Qatar and Oman. For years, BRF’s predecessors Sadia SA and Perdigão SA sold their products to Middle Eastern countries, which observe strict animal slaughtering and handling techniques.
“This will put our company closer to local consumers,” the filing quoted BRF Chief Executive Pedro Faria as saying.
The creation of One Foods underscores BRF’s wish to grow in a buoyant market. The so-called halal meat industry market, which complies with Muslim religious dietary rules, could be worth about $60 billion by the end of this decade, analysts said.
According to the filing, Patricio Rohner will become the CEO of One Foods. Rohner was previously BRF’s head of business for the Middle East and Northern Africa.
