Exclusive: BRF seeks IPO of halal food unit by early April, sources say

SAO PAULO (Reuters) - BRF SA, the world’s largest poultry exporter, wants to raise about $1.5 billion from the sale of a 20 percent stake in a subsidiary focused on the halal processed food market via an initial public offering, two people with direct knowledge of the plan said on Thursday.

São Paulo-based BRF expects the pricing of the One Foods Holdings Ltd’s IPO by late March or early April, depending on market conditions, said the sources. BRF, a Brazilian behemoth created through the merger of two rivals in 2009, is likely to pick London as the listing place for One Foods, they added.

Proceeds could be used to help propel the expansion of One Foods into Asian Muslim nations. One Foods, which operates ten plants and has 15,000 employees, 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 this week, underscoring BRF’s wish to expand in the buoyant market independently from other regions. The market for halal meat, which complies with Muslim dietary rules, could grow to $60 billion by 2020.

Shares of BRF gained as much as 1.6 percent to 49.68 reais on Thursday, cutting losses to 8.4 percent over the past 12 months. Banco BTG Pactual’s trading desk said in a note that a One Foods IPO would help BRF “unlock a lot of value.”

BRF has hired the investment-banking units of Bank of America and Morgan Stanley to underwrite the IPO, with Citigroup acting as an adviser, the sources said.

None of the companies had a comment.

Both BRF and the banks dropped the idea of a listing in the United Arab Emirates, where One Foods is based, the sources said.

According to one source, BRF estimates One Foods has an enterprise value close to $6.5 billion. Enterprise value includes market capitalization, debt, minority interest and cash.

Additional reporting by Paula Arend Laier in São Paulo; Editing by Diane Craft and Jeffrey Benkoe