New large-scale landlord in Ukraine




In these latter days, participants of the Ukrainian agrarian market actively discuss the large-scale business deal in the segment of merging and take-over activity (which is not officially confirmed yet) – the agricultural company Ukrlandfarming purchased agricultural holdings Dakor Agro Holding and Rise. Oleg Bakhmatyuk is the co-owner of the company.

First of all, the person of the owner of company-buyer – Oleg Bakhmatyuk – generates the largest interest, his name is mainly accepted to be connected with the company Avangard (large-scale agro-industrial holding in Ukraine, focusing on the production of shell eggs and egg by-products), but not Cyprian company Ukrlandfarming.

Oleg Bakhmatyuk is the Non-Executive Chairman of the Board of Directors of the the company Avangard. He founded Avangard in 2003. О.Bakhmatyuk graduated from Chernivtsi Economic and Legal Institute with a diploma in business administration in 1996, and from Ivano-Frankivsk National University of Oil and Gas with a diploma in engineering and physics and business administration in 2005. During his career, О.Bakhmatyuk held a number of executive positions. He served as the director of "Prykarpatska Finansova Kompaniya" LLC in 2004, president of "Stanislavska Torgova Kompaniya" LLC in 2005, Deputy Chairman of the Management Board of "NAK Naftogaz" of Ukraine from 2005 until 2006. O.Bakhmatyuk owns other companies in the food, transport, real estate and financial sectors. Avangard remains his largest business holding.

According to data, promulgated on the web-site of Avangard

Information about Ukrlandfarming is quite poor. According to various estimations, the general land bank totals varies within range of 110-150 thsd ha. Ukrlandfarming PLC, registered in the Republic of Cyprus, has own assets in Ukraine, and produces agricultural commodities, in particular grains and cattle breeding products. The general cattle livestock totals nearly 30 thsd heads. Enterprises of the holding are located in 17 oblasts of Ukraine. In the beginning of October 2010, the Antimonopoly Committee of Ukraine allowed to Ukrlandfarming to purchase shares of "Vinnytsiamyaso" Ltd. (Vinnytsia), "Prodcontract" Ltd. and "Bon-Exim" Ltd. (Kiev), dealing with wholesale trade with meat and meat products. These purchases secured over 50% of votes in the supreme management bodies of the enterprises to the company-buyer.

Taking into account purchasing of two agricultural holdings, Ukrlandfarming transforms to the large-scale landowner in Ukraine with the general land bank at the level of nearly 430 thsd ha. To remind, the major industrial capacities and infrastructure of the agroholding Rise, founded in 1992, are located in Poltava and Sumy oblasts. The company owns several elevators and sugar plant. The land bank totals nearly 180 thsd ha. The company Dakor Agro Holding was founded at the end of September 2009, as the result of merging of companies Dakor West and Land West. To date, the company consolidates 4 operating sugar plants, 30 agricultural enterprises, plant for production of alternative fuel, elevator and other subsidiaries. The land bank totals 106 thsd ha.

Thus, Ukrlandfarming will receive the largest land bank in Ukraine, but not the largest area of cultivated lands, marked Tatyana Levchenko, analyst of BG Capital. The essential part of agricultural areas of the company are fallow lands.

Before the official announcement of the purchase results, the sum of merging is not named. However, according to information of market participants, both business operations are already closed. Т.Levchenko considers that high level of indebtedness could have been the possible reason of selling both companies. According to her estimations, the cost of 76% of shares of Dakor Agro Holding for the buyer could total 15-20 mln USD.  Controlling share hoolding of Rise totaled 40-50 mln USD, noted "Kommersant Ukraina".

As a result of the deal, except of the colossal land bank accumulation, the agrarian holding of Oleg Bakhmatyuk may become the second largest operator in Ukraine on sugar market. Besides, the company is going to pay the essential attention on maize production. The same is about the powerful cattle-breeding holding direction.

These two segments – land and food are the priorities for investments of the businessman. If we talk about food, the businessman is going to make Ukraine as one of the largest food suppliers in Europe. 2012 will be very significant for the agrarian market, due to the fact that the food prices will make all the world to pay the essential attention on Ukraine, stated estimations of the FAO.

According to O.Bakhmatyuk, Ukrlandfarming always tenses to increase own land bank, and directly he is interested in land market. Taking into account that during the last time the company essentially increased own land actives, it has good chances for IPO realization.

According to Rodion Rybchinskiy, the head of the department of business-projects of APK-Inform Agency, Ukraine will receive the vertically-integrated agrarian monster. It is about the fact that after Ukrlandfarming purchased the companies Rise and Dakor and received the land actives, the wide net of branches and trade representatives in all over Ukraine, agricultural enterprises, elevators, seeds and sugar plants, the company (which produces beef and pork also) plans to purchase a grain trading enterprise. According to the market participants information, it is about the Ukrainian representative of the company WJ Grain, stated R.Rybchinskiy. He does not exclude that during the agrarian holding creation, the Government capital also took part in the activity.

According to the expert, earlier or later there will be the issue of the effective company control. Also, it does not exclude that Ukrlandfarming accumulates land bank, in order to sell the land actives later.

Roman Zinkov