A large-scale producer of high-value agricultural feedstock has raised $111 million through an IPO on London’s AIM
Landkom International Plc, a large scale producer of highvalue agricultural feedstock that leases agricultural land owned by tens of thousands of Ukrainian farmers, has raised $111 million through an IPO on the London Stock Exchange’s Alternative Investment Market (AIM).
Landkom placed a 49.5 percent stake and the equity is expected to be listed Nov. 22. The company announced the IPO’s conclusion on Nov. 16.
The company, founded in 2005 and valued at $200.6 million, announced an aggressive four-year plan to expand its land portfolio of 30,000 hectares in western Ukraine to more than 10 times that amount by 2015.
The money raised through the AIM float will be invested in leasing more land, buying more production equipment, and increasing working capital and new storage infrastructure, said Richard Spinks, executive director and a founder of Landkom.
A key strategy is to create close relationships with local communities and regional governments in Ukraine, according to the company, incorporated in the Isle of Man, a British offshore zone.
Landkom also plans to meet its target by maximizing the area of land under cultivation and introducing high-yield agronomic practices to Ukraine.
Due to a law barring foreign investors from purchasing agricultural land, Landkom rents its land portfolio from a group of 40,000 individual Ukrainian farmers. The rent is based on 15-year leases.
In 1994, the Ukrainian government privatized agricultural land by parceling it to Ukraine’s former collective farm workers.
Due to their relative poverty and inability to invest in farm technology, much of this agricultural land sat undeveloped for the next decade.
Several worldwide trends will keep prices high for agricultural feedstock in the next several years, including historic lows in wheat reserves and climate change, Spinks said.
Additionally, implementation of Kyoto mechanisms and emissions caps in industrialized nations starts in 2008, driving EU members to find environmentally friendly bio-fuels, a key source of which is rapeseed oil.
Wheat prices are also increasing due to a worldwide demographic shift, he said, as more than 50 percent of the world’s population now lives in urban areas and fewer people are producing their own food.
Furthermore, demand for animal proteinsis growing in populous Asian countries, especially China and India, he said.
Spinks said he leases a hectare of agricultural land in western Ukraine for between $45 to $60 annually, significantly lower than in Western Europe.
The price of rapeseed in Ukraine is worth about $4.20 per ton, while Landkom is selling it for $355 per ton abroad, Spinks said, adding that it is possible to get as much as $566 per ton.
Before launching Landkom four years ago, Spinks worked as director of Central and Eastern Europe for British Seafood, one of the largest frozen seafood importers to Europe.
