Ukraine: MHP feeds appetite for farming
Bankers say there will be further equity capital markets issuance from farming groups in Ukraine in the coming months.
Fund managers are keen to increase their exposure to agriculture, which, thanks to surging global demand and soft commodity prices, is emerging as a key investment theme in central and eastern Europe.
"We think that 2008 will be a landmark year for share issues by agricultural groups in Ukraine," says Tamara Levchenko, agriculture analyst at leading Ukrainian investment bank Dragon Capital. Blessed with an abundance of highly fertile black earth farmland, Ukraine is increasingly seen as a key player in global agriculture, a status that has been bolstered by the country’s accession to the World Trade Organization.
The latest Ukrainian agribusiness to tap international investors is Mironovskiy Hleboproduct, which started trading on the London Stock Exchange in late May after raising $371 million in an IPO, lead managed by Morgan Stanley and UBS. The transaction is the largest agriculture-related play from the country to date. "Vertical integration has been the recurring highlight among investors during the MHP roadshow," says Frances Fahey, managing director, equity capital markets at UBS in London. "MHP’s business model not only allows it to enjoy full control over its operational supply chain but also delivers the ability to mitigate input cost volatility."