BRF is reportedly investigating the sale of a stake in its newly created halal business, One Foods, instead of an initial public offering (IPO) as first expected.
Reuters reported that the company had ‘engaged in talks for a private stake sale to sovereign wealth and buyout funds’, citing sources close to the negotiations. It had previously been expected to launch an IPO before the middle of the year, raising $1.5 billion.
But seeking a private investment in One Foods would increase the value of the business unit, which has been rumoured to be $6.5 billion.
One Foods was created in January as a new distribution and production business within BRF, specifically target at halal markets.
The division quickly acquired a majority stake in Banvit, the largest poultry producer in Turkey, as part of a $470 million deal.
Banvit is a fully integrated producer, with facilities ranging from feed control to final food processing. The company has five feed plants, four hatcheries and five production plants across Turkey, which, despite its relatively low consumption of chicken, is a major player in the global halal market.
Returs says that São Paulo-based BRF’s IPO plans ‘lost steam’ when it reported a fall in its like-for-like fourth-quarter revenues of 4.1%.
The company reported net operating revenue of BRL 8.6 billion ($2.77 billion) for 2016 – 1% higher than the previous quarter – but its year-on-year revenue fell, and gross profit was nearly 40% lower than the fourth quarter of 2015.
In a conference call with investors, chairman Abilio Diniz and chief executive officer Pedro Faria vowed not to repeat the mistakes that led to the disappointing results – and the company later parted company with its chief financial officer, Alexandre Carneiro Borges.
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