UkrLandFarming, the Ukraine agriculture giant in which Cargill bought a stake in January, is seeking further investors to fund a warchest for buying on the cheap groups brought low by the country’s crisis.
UkrLandFarming said it was “in discussions with potential investors” over the sale of a stake in the group, which – with a landbank of 654,000 hectares, is more than twice the size of Luxembourg – claims to be Ukraine’s biggest farming group.
A deal with the investors, which the farm operator said were showing “strong interest” in a deal, would promote the company’s progress on paths to broaden its shareholder base ahead of a stockmarket flotation.
It would also back an aim of “potentially taking advantage of distressed acquisition opportunities in the Ukrainian market at the moment”.
Ukraine’s woes – stemming from tensions in the east with pro-Russian separatists, besides the loss of Crimea, but also evident in a tumbling hryvnia – have hurt companies in a number of sectors.
Sergei Feofilov, the director general of Kiev-based consultancy UkrAgroConsult, on Tuesday highlighted the difficulties facing farmers, with the weak hryvnia, while supporting crop exports, raising the cost of imported inputs, such as agrichemicals.
Indeed, with crop prices falling, while costs rise, Ukraine agriculture is seeing a “rather impressive discouraging factor”, he told a conference in London.
However, this follows a bumper grains harvest this year, as underlined separately by chicken-to-corn group MHP, which revealed a 25% rise to 6.70 tonnes per hectare in its wheat yield this year, as calculated from harvested area, while the rapeseed result rose 16.5% to 3.76 tonnes per hectare.
UkrLandFarming, which is controlled by Ukrainian billionaire Oleg Bakhmatyuk, said it was offering preferred shares to its new investors, contrasting with the ordinary shares purchased by Cargill, and which it is believed wold form the basis for a stockmarket offering.
The group three months ago postponed an IPO planned for both Hong Kong and London, citing Ukraine’s internal conflict, but retains a desire for a flotation.
“It is still planned, but with everything else going on it is not going to happen soon,” a person familiar with the situation told Agrimoney.com.
A flotation would act to reverse the downward trend in the stockmarket fortunes of Ukraine’s foreign-listed farm operators, with their total market capitalisation falling to some E2.6bn, from nearly E5bn at the start of 2013, according to UkrAgroConsult.
The number of listed Ukraine farming companies has tumbled to about 10-11, from 25 at the start of the decade, when flotation offered a popular way of raising financing, Mr Feofilov said.
Agrokultura, the Stockholm-listed Black Sea farm operator which bought rival Landkom three years ago, over the summer saw sports retail tycoon Nikolay Fartushnyak take a majority stake.
(Source – http://www.agrimoney.com/news/ukrlandfarming-seeks-funds-to-buy-troubled-rivals–7603.html)