Sanctions, unrest, and the economic fallout resulting in the closing of Western capital markets and the unavailability of domestic credit are driving Russian agricultural operations to seek funding in Asia and the Middle East.
Kuban Agricultural Holding, the agricultural division of Oleg Deripaska’s Basic Element Group, is in talks with Chinese and Arab strategic investors and funds, including the China Investment Corporation (CIC) regarding securing an investment in excess of $200 million in exchange for a less-than-controlling stake in the group.
The funds will be allocated toward the increase in production across all divisions, including soybean processing, research and development in seed production, and a development program in breeding cattle through the process of embryo transfer. Kuban has no immediate plans for geographical expansion.
Kuban’s assets include a meat processing complex, 11 dairy farms, two pig breeding complexes, grain elevators, seed processing and production facilities, a sugar factory, and a stud farm.
For 2014, Kuban posted a 9% increase in revenue and a net profit of 1.1 billion rubles (US$18.3 million). Because of a lack of financing, the company has placed multiple projects on hold so that the company can focus on its most important actions of modernizing its sugar factory and increasing seed production.
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