Reuters | Wednesday May 6 2009
DUBAI, May 6 (Reuters) -- Russian grain processing firm PAVA plans a farmland investment road show across the Gulf region over the next two months and is open to selling shares to Middle East investors as it aims to triple the land under its control.
PAVA, the first Russian grain processing company to float on the stock market, plans to offer the chance to invest in 500,000 hectares (1.24 million acres) to Gulf Arabs seeking to secure food supplies, Galina Balaenkova, PAVA's director for international business development, said.
The investors would have a stake in the land through their share holdings in the company.
Gulf countries, mainly reliant on food imports, have ramped up efforts over the last year to buy land in developing nations ranging from Pakistan to the Philippines and Ethiopia.
"We have been noticing this trend and we believe that there are a lot of opportunities for Gulf countries in Russia because we have the land and farming expertise here," Balaenkova told Reuters in an interview on Wednesday.
The road show will start in about a month and a half and include Saudi Arabia and the United Arab Emirates, two of the world's largest oil exporters, where intense heat has dwindled water reserves and limited agricultural production.
In April, the father-and-son-owned company said it had plans to sell shares through private placements of up to 40 percent of shares in Russian Agricultural Division (RAD), the PAVA subsidiary responsible for land assets.
It is pursuing a tenfold increase in grain production by restoring vast tracts of fallow Siberian land slightly larger than the emirate of Dubai.
BNP Paribas is advising PAVA.
"We want investors from all of the Gulf countries to invest in these shares," Balaenkova said.
"We are willing to be very flexible with private or public Gulf investors in terms of how much produce we allow them to ship back to their countries," said Balaenkova.
The land will be used to produce grains including wheat, barley, rye and sunflower seeds, but could grow fruits and vegetables in the future.
RUSSIAN OPPORTUNITIES
Farmers in Russia, the world's No. 5 grain grower, harvested their biggest ever wheat crop last year after investing in the revival of a sector crippled by the legacy of collectivisation and a decade of post-Soviet neglect.
The world financial downturn, however, has stalled growth in a sector heavily reliant on bank credits.
"Abundant farmlands in Russia provide a unique investment opportunity... besides, land in Russia is still an underestimated asset," she said. In the United States land costs per hectare can run up to $30,000, while in Russia its around $250 per hectare, Balaenkova said.
The company produced over 30,000 tonnes of grain last year. It plans to double output this year and reach over 300,000 tonnes in 2010.
Pakistan's investment minister said earlier this month it was planning a farmland sale road show across the Gulf region to inform potential investors of the terms they must meet.
Pakistan has offered to sell or lease 404,700 hectares of farmland to foreign investors looking to secure food supplies to their countries. (Editing by John Irish and Anthony Barker)
- Russia's PAVA to offer investors 500,000 ha of farmland
- Land offered to produce wheat, barley, rye, sunflower seeds
- Wants Gulf investors to buy shares in firm
- Plans road show in Gulf Arab region over next two months
DUBAI, May 6 (Reuters) -- Russian grain processing firm PAVA plans a farmland investment road show across the Gulf region over the next two months and is open to selling shares to Middle East investors as it aims to triple the land under its control.
PAVA, the first Russian grain processing company to float on the stock market, plans to offer the chance to invest in 500,000 hectares (1.24 million acres) to Gulf Arabs seeking to secure food supplies, Galina Balaenkova, PAVA's director for international business development, said.
The investors would have a stake in the land through their share holdings in the company.
Gulf countries, mainly reliant on food imports, have ramped up efforts over the last year to buy land in developing nations ranging from Pakistan to the Philippines and Ethiopia.
"We have been noticing this trend and we believe that there are a lot of opportunities for Gulf countries in Russia because we have the land and farming expertise here," Balaenkova told Reuters in an interview on Wednesday.
The road show will start in about a month and a half and include Saudi Arabia and the United Arab Emirates, two of the world's largest oil exporters, where intense heat has dwindled water reserves and limited agricultural production.
In April, the father-and-son-owned company said it had plans to sell shares through private placements of up to 40 percent of shares in Russian Agricultural Division (RAD), the PAVA subsidiary responsible for land assets.
It is pursuing a tenfold increase in grain production by restoring vast tracts of fallow Siberian land slightly larger than the emirate of Dubai.
BNP Paribas is advising PAVA.
"We want investors from all of the Gulf countries to invest in these shares," Balaenkova said.
"We are willing to be very flexible with private or public Gulf investors in terms of how much produce we allow them to ship back to their countries," said Balaenkova.
The land will be used to produce grains including wheat, barley, rye and sunflower seeds, but could grow fruits and vegetables in the future.
RUSSIAN OPPORTUNITIES
Farmers in Russia, the world's No. 5 grain grower, harvested their biggest ever wheat crop last year after investing in the revival of a sector crippled by the legacy of collectivisation and a decade of post-Soviet neglect.
The world financial downturn, however, has stalled growth in a sector heavily reliant on bank credits.
"Abundant farmlands in Russia provide a unique investment opportunity... besides, land in Russia is still an underestimated asset," she said. In the United States land costs per hectare can run up to $30,000, while in Russia its around $250 per hectare, Balaenkova said.
The company produced over 30,000 tonnes of grain last year. It plans to double output this year and reach over 300,000 tonnes in 2010.
Pakistan's investment minister said earlier this month it was planning a farmland sale road show across the Gulf region to inform potential investors of the terms they must meet.
Pakistan has offered to sell or lease 404,700 hectares of farmland to foreign investors looking to secure food supplies to their countries. (Editing by John Irish and Anthony Barker)
