- Jeff Ubben says asset sales could almost double OCI’s value
- OCI chief says company will undertake strategic review
According to Bloomberg article published on March 28, 2023, activist investor Jeff Ubben’s Inclusive Capital Partners is urging OCI NV to explore strategic options including asset sales, saying the Dutch chemical producer is worth almost double its €5.5 billion ($6 billion) market value.
OCI has an opportunity to lead the energy transition to decarbonize ammonia and methanol-based fuels, and it has assets that would be attractive to oil and gas majors moving to cleaner energy forms, Ubben wrote in a letter to OCI Executive Chairman Nassef Sawiris.
The Amsterdam-listed company should consider options for its methanol business and low carbon ammonia project in Beaumont, Texas, as well its Iowa Fertilizer Co. unit, according to Ubben. OCI is “both misunderstood and under-analyzed” and is worth about 90% more than its current stock price based on its underlying assets and announced projects, Ubben wrote.
“We believe that OCI will struggle to achieve its full and fair value in its current structure,” Ubben said in the letter, a copy of which was seen by Bloomberg News. “With such a valuable company at such a disconnected stock price, the status quo for OCI is clearly not working.”
Ahmed El-Hoshy, OCI’s chief executive officer, said in a phone interview Tuesday the company plans to undertake a strategic review to address the points raised by Ubben and “examine all potential suggestions.”
San Francisco-based Inclusive Capital owns 5% of OCI. It also holds a stake in Fertiglobe Plc, the Middle Eastern fertilizer venture it jointly controls with Abu Dhabi National Oil Co.
Fertiglobe went public in a 2021 initial public offering, a deal that Ubben said showed the value within OCI’s portfolio. Fertiglobe’s stock has risen 54% since its listing.
“This IPO was a good first step to demonstrate value,” Ubben wrote. “To unlock further value, OCI should consider additional share listings or a sale.”
Ubben commended OCI management for positioning the company to generate “meaningful financial, environmental, and social value,” but said OCI should consider how to best harness this value to further return capital to shareholders.
Iowa Fertilizer may achieve a substantially higher valuation in a strategic sale and would be of great value to pure-play fertilizer producers like Nutrien Ltd. seeking nitrogen production in the US Corn Belt, according to Ubben.
El-Hoshy said he agrees with Ubben that OCI is undervalued.
“Our DNA has always been focused on value creation and maximization over our history,” he said.
