Yara postpones clean ammonia IPO after weak valuation

OSLO (Reuters) -Norway’s Yara has postponed a planned initial public offering of its Yara Clean Ammonia (YCA) business by one or two years due to an unsatisfactory market valuation, the fertiliser maker said in a strategy update on Monday.

Yara in May last year said it had retained bankers to explore a listing of YCA on the Euronext Oslo Stock Exchange and thus allow the subsidiary to raise capital by selling a minority stake to other investors.

“The value of the Yara Clean Ammonia portfolio surpasses the current estimated IPO valuation and as a result we are delaying the potential initial public offering by one to two years,” Yara CEO Svein Tore Holsether told investors.

He said YCA was still progressing with its project pipeline and that major cash investments were not expected to take place until 2025.

In contrast to traditional production methods, clean ammonia is made with minimal or no CO2 emission – either from renewable energy, known as ‘green’ ammonia, or from natural gas with carbon capture and storage, known as ‘blue’ ammonia.

Canadian pipeline group Enbridge and Yara said in March this year they aimed to invest up to $2.9 billion in blue ammonia output in Texas in what would be Yara’s biggest production site.

Yara last week told Reuters it is considering two sites for a second North American project which would take advantage of U.S. subsidies and cheap natural gas to make blue ammonia and export it to Europe.

On Friday Yara and Denmark’s Bunker Holding Group said they plan to collaborate to speed up the development of low- and zero-carbon ammonia as fuel for the global shipping industry.

Yara’s share price fell 1.6% by 0850 GMT on Monday, underperforming a 1.0% decline in the Oslo benchmark index.

Yara last year retained investment banks ABG Sundal Collier and J.P. Morgan to work on the IPO.

(Reporting by Terje Solsvik; Editing by Edmund Klamann and Conor Humphries)