A combination of geographic, socio-political, and economic factors are colliding, creating a scenario in Ukraine making the country’s farms and agriculture sector attractive targets for private equity.
As global population expectations reach 9 billion by 2040, and available arable land tightens, Ukraine poses one of the highest potentials for land conversion with 32 million hectares (79 million acres) that can be cultivated in row crops.
As the country struggles to deal with a pro-Russian insurgency, violence in the east, and a bettering of the hryvnia, available capital has become exceedingly difficult and expensive to obtain, especially after the Ukrainian government raised interest rates to 30% in March, leaving many agricultural operations without the operating capital needed to run their business.
“Almost all agricultural companies in Ukraine are in trouble,” says Michael Bleyzer, head of private equity firm, SigmaBleyzer in an interview with Bloomberg on April 29. “Opportunities today because of these very harsh conditions are incredible.”
SigmaBleyzer owns AgroGeneration, which manages wheat, sunflower and other crops across give regions of Ukraine and is seeking additional investment opportunities, both organic and through mergers and acquisitions for expansion within the sector in the country.
AgroGeneration has secured the needed capital for its winter crops planted in 2014 and its spring crops planted this year and plans to sow 108,000 hectares in 2015. The group plans to shift more acreage into sunflowers and away from corn as it does not envision a corn price recovery occurring this year.
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