Reuters | 30 January 2012


SINGAPORE Jan 30 (Reuters) - Singapore's commodity trader Olam International is partnering Russian Dairy Company LCC (RUSMOLCO) in the dairy and grains business and will jointly invest $400 million in Russia over the next five years.

In a joint statement on Monday, Olam said it will invest up to $75 million in exchange for a 75 percent stake in RUSMOLCO to tap the large and growing demand for dairy and dairy-based products.

"Russia is one of the most attractive markets for dairy farming today," the Singapore-based company said. It cited large supply shortages and low cost of land as the rationale for its investment.

Olam said up to $320 million of the $400 million capital spending will be funded by RUSMOLCO along with some support from the Russian government. Olam expects no additional equity call on the investment.

RUSMOLCO will build a 20,000 milking cow population dairy farm and a 106 hectare grains farming operation over the next 4-5 years.

Olam said RUSMOLCO plans to double the size of the operation in the subsequent 3-4 years, which would enable the Russian firm to have an annual milk output of 500 million litres from just above 23 million litres currently. (Reporting by Harry Suhartono; Editing by Anshuman Daga)