BRF SA, Brazil’s biggest food company, is speaking to Middle Eastern investors as it weighs raising as much as $500mn for its Sadia halal unit before an initial public offering, according to people familiar with the matter.
The company is in talks with investors including the Saudi Agriculture & Livestock Investment Co and sovereign wealth funds in Qatar and Abu Dhabi, the people said, asking not to be named as the details aren’t public. BRF hasn’t made a final decision and no agreement has been reached with any of the investors.
The Middle East is the largest market for Sadia, which makes chicken and sausages that adhere to halal standards for Muslim customers. Sadia may list in the region when it goes public next year, people familiar with the matter said in September. An IPO could value the business at about $5bn, people had said.
Pre-IPO fundraising rounds can set a benchmark for a company’s valuation in a listing. A spokesman for BRF declined to comment. Salic didn’t approach BRF, a spokesman said.
Companies in the Middle East and Africa raised $1.5bn from IPOs this year, less than half what they sold in the same period in 2015, according to data compiled by Bloomberg. Those numbers may change drastically next year if Saudi Arabian Oil Co goes public in a deal that could raise $100bn and become the largest of its kind globally.
Salic and BRF are the second- and third-largest shareholders respectively of Minerva SA, one of Brazil’s largest beef producers, according to data compiled by Bloomberg. Salic owns about 20% of Minerva after agreeing to take a stake last year.
BRF fell 5.7% this year in Sao Paulo, missing out on the world-beating rally that’s swept across the Brazilian stock market as a domestic recession combined with surging costs eroded the company’s profits.