TOP 10 investment transactions in the agribusiness sector of Ukraine

TOP 10 investment transactions in the agribusiness sector of Ukraine

InVenture and Landlord magazine have rated largest M&A transactions in the agricultural sector of Ukraine in 2018

In Ukraine, the trend of agribusiness M&A transactions continues to grow primarily in the field of crop production with an eye towards control and consolidation of the land bank. Landlord magazine and the investment company InVenture have rated the largest M&A transactions in the agricultural sector of Ukraine among crop production companies for 3 quarters of 2018.

There are more than 150 agricultural holdings and companies in Ukraine today, the capitalization of which exceeds tens of millions of dollars, and most of them are keen on expanding their activities, including through the absorption of agricultural assets.

The analyzed acquisitions include crop producing companies with the right to lease farmland as the main asset. In addition to the land bank, the assets of agricultural companies comprised: the complex of agricultural machinery for land processing, livestock, elevator capacity, crops processing capacity.

M&A transactions are ranked according to the size of the land bank of the companies to be acquired, as official data on the value of transactions is not disclosed. Despite this, the value indicators of some transactions are given based on expert assessments of market participants. Assumptions on the value of transactions were based on an expert assessment of the market value of fixed assets of companies irrespective of payables and receivables.

M&A transactions rating includes both transactions that have already taken place and those that are under consideration of the AMCU.

During the preparation of the rating, a joint analysis was conducted with the largest audit and legal companies of Ukraine to identify the transactions and their terms. The leaders of the market are: Dragon Capital, Concorde Capital, Alexandrov&Partners, Asters.

Investment Agriculture Ukraine

#1 Mriya Agroholding

Transaction value: $242 million

 Main assets:
- the land bank: 165 thousand ha
- Elevator 380 thousand tons
- Seed and starch factories

- crop production
- livestock production
- seed business
- storage and processing of agricultural products
- logistics
- trading
Regions: Ternopil, Khmelnytsky, Lviv, Rivne, Ivano-Frankivsk and Chernivtsi oblast 

Acquirer: SALIC UK Ltd (UK)

Seller: Mriya Farming PLC (UK)

Consultants: Rothschild & Co, ICU, FinPoint, Hogan Lovells

11 September 2018 Mriya Farming PLC (UK) and SALIC UK Ltd (Saudi Agricultural and Livestock Investment Company, UK) announced purchase agreement of the Mriya group assets, including all infrastructure, technical park, as well as companies that have the right to lease the land bank. Upon closing of the transaction, Mriya will continue operating in Ukraine together with its subsidiary SALIC - Continental Farmers Group (CFG). Mriya Agroholding is expected to become a managing company and Ukrainian companies Agromark UK Ltd, Agro LV Limited, Grain Land, Agrolandinvest UK that are a part of Continental Farmers, will be included in the new holding. Continental Farmers subsidiaries in Ukraine control 45 000 ha, and the land bank of Mriya Agroholding has 165 000 ha, thus the total land bank of the new agricultural holding is 210 000 ha.


#2 Agrofirm Tripolye, Radivilov Agro

Transaction value: $28 million

 Main assets:
- the land bank: 20 thousand ha

- crop production

 Region: Rivne oblast

 Acquirer: Vitagro

Seller: Agro-industrial group Pan Kurchak

In February 2018 Vitagro Group through the agroholding Zarya completed the purchase of 100% shares of Agrofirm Tripolye and Radivilov Agro, located in the Rivne region. Both enterprises were part of the agro-industrial group Pan Kurchak.

The transaction allowed the group of companies Vitagro to increase its land Bank up to 80 thousand ha. In the group of companies Vitagro consists of the enterprise-agricultural profile in the Khmelnitsky, Rivne and Ternopil regions. The group specializes in the production and processing of agricultural crops, including fruits and vegetables, as well as dairy farming and pig farming. In addition, Vitagro is engaged in the construction and repair of roads, brick production.

The group of companies Pan Kurchak, established in 2002, unites a number of companies, including Western Agricultural Company, Agrotechnika, Poultry Complex Gubin, Ukrainian Retail Chains and others. The Group is engaged in the production of grain and formula feed, poultry and poultry production.


#3 Kyiv-Atlantic Ukraine

 Transaction value: $ 18 million

 Fixed assets:
- the land bank: 8 thousand ha
- Elevator 50 thousand tons
- Formula feed factory
 - Oilseeds processing factory

- crop production
- formula feed production
- protein-mineral vitamin supplements production
- oilseed processing
- agricultural production storage

Region: Kiev and Cherkassy oblast

Acquirer: Eridon

 Seller: Kyiv Atlantic Group

Consultants: VI2 Partners

In June 2018 Eridon Group closed the acquisition of Kyiv-Atlantic Ukraine agroholding. The founders of the company were the american family Sviri and the Danish company DUI Holding, which joined the shareholders in 2006.

The decision to sell Kiev-Atlantic Ukraine was made by the owners in 2015-2016 to ensure the restructuring of credit obligations to Ukrsotsbank.

After the acquisition of Kiev-Atlantic Ukraine, Eridon carried out further sale of the formula feed business to the German company Agrolife GmbH.

Crop companies Atlantic Farms and Atlantic Farms II remained in the ownership Eridon. Their main activity is the cultivation of grain and industrial crops. As a result of the transaction, Eridon increased its land bank to 39 thousand ha.

According to Eridon's commentary in 2018, the company no longer plans to acquire new assets or build additional facilities for processing or storing agricultural products.


#4 Shpola-Agro Industry

 Transaction value: $15.9 million

Main assets:
- the land bank: 15 thousand ha
- elevator: 32 thousand ha

- crop production
- seed business
- livestock farming

Region: Cherkasy oblast

Acquirer: LNZ Group

 Seller: Farm Invest Corporation S.A. (ByFrederic)

Consultants: EY, Vasil Kisil & Partners, Baker Tilly

LNZ Group acquired 100% of corporate rights of Shpola-Agro Industry with all the infrastructure and equipment in the Cherkasy region and, thereby, increased the land bank by 16.7% - to 70 thousand ha. LNZ Group, established on the basis of Lebedinsky seed plant, is engaged in trade of the following seeds: maize, sunflower, wheat, barley, cultivation of agricultural products. In addition to the crop business, LNZ Group also owns a livestock business (4.6 thousand head of cattle). LNZ Group also owns elevator complexes in Sumy and Kirovograd regions, the total storage capacity of which is 170 thousand tons of grain.

The company in question, Shpola-Agro Industry specializes in cultivation of wheat, corn, sunflower, cattle farming and also provides services of primary processing and storage of the grain.

ByFrederic group will continue to operate in Ukraine selling corn, sunflower, rapeseed, soybean and other crops, as well as maintaining agricultural machinery.


#5 Agrofirm Iskra, Soyeva Sfera, Stud Farm Yanenkovsky

Transaction value: $14 million

Main assets:
- the land bank: 8.7 thousand ha

- crop production
- livestock farming

Region: Kiev and Cherkassy oblast

Acquirer: Eridon

Seller: Agrain Group

Evroset, which is a part of Eridan Group, in June of 2018 closed the acquisition of three companies Agrofirm Iskra (Cherkassy region), Soyeva Sfera (Kyiv region) and Stud Farm Yanenkovsky (Kiev region). All three enterprises were part of Agrain Group, which specializes in the cultivation of crops and oilseeds, grain trade, unprocessed tobacco, seeds and animal feed.

As a result of the transaction Eridan Group has increased its land bank by 8 thousand ha. Acquired assets will allow the new owner to promote the livestock and dairy business more effectively.


#6 KZTS Mashining

Transaction value: $12 million

Main assets:
- the land bank: 14,5 thousand ha

- cultivation of crops

Region: Donetsk oblast

 Acquirer: APK-Invest

 Seller: Valery Pilipko, Maxim Efimov, Ruslan Lunyachenko

 In October 2018 Boris Kolesinkov's APK-Invest received the approval of the AMCU for the acquisition of a share in KZTS Engineering's authorized capital. As a result of the deal, APK-invest will increase its land bank to almost 47 thousand ha.

KZTS Mashining specializes in crop, legumes and oilseeds production, and also is engaged in farming.

The company in question is equipped with modern machinery John Deere, CLAAS etc. KZTS Machinery founders are Valery Prilipko, Maxim Efimov and Ruslan Lunyachenko.

APK-Invest is a vertically integrated agro-industrial company with a complete closed production cycle of chilled pork: from grain cultivation and production of formula feeds to production and realization of meat production. On the market the company is represented by Myasnaya Vesna and Kolbaspischeprom trademarks and branded retail network Myasnaya Vesna.


#7 Ruzhynsky Krai

Transaction value: $7.7 million

Main assets:
- the land bank: 5.5 thousand ha

- Crop production

- Growing vegetables
- Trading

Region: Zhytomyr oblast

Aqcuirer: Cygnet
Seller: Agrofirm Rassvet

In July 2018 Cygnet Group closed the transaction for the purchase of Ruzhinsky Krai, increasing its land bank by 5.5 thousand ha. Due to this transaction, Cygnet's land bank reached 29 thousand ha.

The ultimate beneficiary of Ruzhinsky Krai was Tatiana Zasukha. The enterprise specializes in the cultivation and realization of agricultural crops, including vegetables.

Cygnet Group, established in 2011, before joining of the new enterprise processed 24 thousand ha in Zhytomyr and Vinnitsa regions. The group is engaged in production of corn, soy, wheat, sugar beet. Cygnet's dairy business products are sold to local processors. Cygnet Group has an elevator capacity of 60 thousand tons of storage.

#8 Agrofirm Rossiya

 Transaction Value: $ 7500000 *

Fixed assets:
- the land bank: 10 thousand ha
- elevator: 20 thousand ha

- crop production
- livestock farming
- storage and processing of agricultural products
- trading
- formula feed production

Region: Zaporizhya oblast

Aquirer: Landfort

Seller: Private party

Landfirt holding, which is part of the BKW Group, increased its land bank to 37 thousand ha due to Agrofirm Rossiya acquisition.

Landfort is a relatively young enterprise with Ukrainian capital. A company is owned by Vitaly Bogovin and Vadim Kovernik who have combined their assets in 2016.

In addition to the land bank of 10 thousand ha, the new owner also received a livestock complex for 1500 head of cattle, a feed factory, an elevator with a capacity of 20 thousand tons 40 km from the Berdyansk seaport, as well as a fleet of agricultural machinery - more than 40 units.

The main specialization of Agrofirm Rossiya is wheat, sunflower, barley, peas and corn production.


#9 Galician Agrarian Investments

Transaction value: $6.5 million

Main assets:
- the land bank: 6,5 thousand ha

- grain and oilseed production
- grain and animal feed trade

Region: Ivano-Frankivsk oblast

Acquirer: GoodValley Ukraine (Danosha)

Seller: Ukrainian Agricultural Investments (Kernel Group)

In February 2018 pig breeding farm Danosha, 100% owned by Danish investors,  announced the conclusion of the transaction for the acquisition of 100% shares of Galician Agrarian Investments, which previously was a part of the agro holding Ukrainian Agricultural Investments.

As a result of the takeover, Danosha increased its land bank by 6.5 thousand ha and gained access to the raw material base of the existing, well-established enterprise.

Galician Agrarian Investments company specializes in crops and oilseeds production. The company also sells grain and animal feed.

In June 2017, Ukrainian Agricultural Investments became subsidiary of Kernel Group, the world's largest producer and exporter of sunflower oil, a leading producer and supplier of agricultural products from the Black Sea region.


#10 Inter-Contact-Agro, Private Enterprise Agricultural Firm (PEAF) Start

Transaction value: $5.6 million

Main assets:
- the land bank: 6.5 thousand ha

- crop production

Region: Kirovograd and Odessa oblast

Acquirer: UkrAgroCom Group and Hermes-Trading

Seller: Ukrainian Agricultural Investments (Kernel Group)

In May 2018 UkrAgroCom agroholding closed the acquisition of two agricultural enterprises of Kernel Group Inter-Contact-Agro LLC and PEAF Start for $5.6 million.

The agreement falls in line with the plans of UkrAgroCom and Hermes-Trading to increase the land Bank from 114 thousand ha to 120 thousand ha.

According to the sales manager of UkrAgroCom Pavel Fesyuk, the agricultural holding decided to purchase these enterprises in February this year.

Inter-Kontakt-Agro LLC and PEAF Start, which are located in the Kirovograd and Odessa regions respectively, cultivate in total more than 6.5 thousand ha of the leased agricultural land. By the time of the transaction, both companies had completed all agrochemical and sowing operations in the fields. The companies also own the necessary agricultural machinery for cultivating the entire land bank.

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