Russian farming firm to test investor appetite

(Photo courtesy ARS/USDA)

Moscow | Reuters — Russian farming conglomerate Rusagro launched a secondary share offering on Thursday which will test foreign appetite for Russian assets.

Share sales by Russian companies have been rare since Western sanctions imposed in 2014 over Ukraine cut access to foreign capital markets and after a sharp drop in global oil prices, the lifeblood of the country’s economy, cooled interest in Russia’s assets.

Rusagro, which produces sugar, pork and fats and has ambitious expansion plans, is the first Russian company to try to sell new shares in about six months, since retailer Lenta raised US$150 million in October 2015.

In February, a unit of China Investment Corporation sold its stake in Moscow Exchange on the market and lender Promsvyazbank started this month book building for a share placement by an existing shareholder.

“We are counting on foreign investors,” a source close to Rusagro’s offering said.

Rusagro said that Vadim Moshkovich, its controlling beneficial shareholder, planned to purchase up to around US$100 million of newly issued global depositary receipts.

State-backed Russian Direct Investment Fund was also rumoured to buy into the issue, a financial market source said without providing details.

Shares in Rusagro have risen by 220 per cent over the past two years as the company ramped up output and revenues, helped by import restrictions and higher sugar prices.

Rusagro intends to use the net proceeds from the offering for funding of investment projects, including a pig breeding complex in Russia’s Far East and greenhouse facilities in central Russia, it said in a statement.

It also plans to modernize the recently acquired Razgulay sugar plants and may make more acquisitions, it said.

J.P. Morgan, UBS and VTB Capital are acting as joint global coordinators and bookrunners in connection with the offering.

A financial market source said the bookbuilding will be completed on April 27 with pricing on April 28.

Reporting for Reuters by Olga Popova in Moscow. Additional reporting and writing for Reuters by Maria Kiselyova.

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