(Bloomberg) -- OCI NV said it will conduct a strategic review after one of its largest shareholders, activist investor Jeff Ubben, urged it to consider asset sales to unlock value.

The Dutch chemical producer will “examine all potential suggestions” put forward by Ubben, Chief Executive Officer Ahmed El-Hoshy said in a phone interview Tuesday. Ubben, whose firm Inclusive Capital Partners owns 5% of OCI, said the company is worth about 90% more than its current stock price. 

In a letter to Executive Chairman Nassef Sawiris on Tuesday, Ubben said OCI has assets that would be attractive to oil and gas majors moving to cleaner energy forms. OCI is “both misunderstood and under-analyzed,” he wrote. The company’s shares rose as much as 14% in early trading Wednesday and were up 13% at 11:10 a.m. in Amsterdam, giving it a market value of €6.3 billion ($6.8 billion).

“We believe that OCI will struggle to achieve its full and fair value in its current structure,” Ubben wrote 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.”

Energy Transition

OCI has an opportunity to lead the energy transition to decarbonize ammonia and methanol-based fuels, according to Ubben. The company should consider options for its methanol business and low carbon ammonia project in Beaumont, Texas, as well its Iowa Fertilizer Co. unit, he said. 

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.

San Francisco-based Inclusive Capital also holds a stake in Fertiglobe Plc, the Middle Eastern fertilizer venture that OCI 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 56% 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.”

Returning Capital

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. 

“We welcome the dialogue with our shareholders, and will evaluate the merits of the views and ideas of our stakeholders, including In-Cap,” OCI said in a statement late Tuesday. 

Ubben left the hedge fund he founded, ValueAct Capital Management, in 2020 and started Inclusive Capital. The firm, which focuses on social and environmental investing, has previously taken positions in electric-truck company Nikola Corp., power generator AES Corp. and bioenergy firm Enviva Inc.

Earlier this year, it emerged that Ubben had taken a stake in German drugs and agriculture company Bayer AG, whose shares have slumped since its troubled takeover of agriculture giant Monsanto Co.

(Adds details on Ubben positions in final two paragraphs.)

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