October 5, 2011 / 12:26 AM / 6 years ago

UPDATE 2-Noble Group eyes Singapore listing of agri business

* Agriculture business accounts for 33 pct of Noble’s earnings

* Nomura sees equity value of more than $5 bln for the business

* Noble says listing subject to market conditions

* Noble shares up 5.8 pct; broader Singapore market up 0.2 pct (Adds stock move, adviser)

By Saeed Azhar and Eveline Danubrata

SINGAPORE, Oct 5 (Reuters) - 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 $5 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 on Wednesday. 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 percent on Wednesday, their biggest intra-day jump since Aug. 31. The broader Straits Times Index was 0.2 percent higher at 0341 GMT.

Noble, which counts sovereign wealth funds China Investment Corp and Korean Investment Corp among its shareholders, has a market value of about $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 $5 billion and even at current valuations, it should have a value of $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 soybean 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 percent, more than the 21 percent drop in the Singapore market, based on Tuesday’s close. (Editing by Matt Driskill and Vinu Pilakkot)

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