Russian Ukrainian love cheese. The economic crisis has intensified the transaction for buying and selling of cheese-making industry of Ukraine. VD tried to find out where the new investors will come.

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Ukrainians have another reason for pride: after the victorious expansion of fat and on the tables gorilka Russian inhabitants successfully gained ground Ukrainian cheese. Neighbors prefer products from Poltava and Sumy regions. It is even more expensive and Russia, but also in quality above. Correspondents VD to find out what promises Ukrainian companies such affection.

Bum investors

In recent years, Ukrainian cheesemaking industry came in the wake of the agro-industrial complex. Cost the country away from the crisis of 1998, as the appetites of citizens have risen sharply, and with them increased and consumption of cheese (for 1998-2008. Almost four times - to 191 tonnes). The producers were able to move their products, and more on foreign markets, increasing supply abroad in 65 (!) Times (from 1 thousand tons to 65 tons in 2008).

Naturally, such a dynamic growth saw investors - both foreign and domestic. Thus, the strategic investors from France found Zvenigorodsky Cheese Factory (company Bongrain acquired it in 2001) and Shostkinsky gormolkombinat (Bel Group in 2007). Apparently in anticipation of strong growth in the market to buy assets beginning in 2007, another group of foreign investors, aimed at resale in the future, Cheese factories. To this group may include a deal to buy Russia's Renaissance Group of the Ukrainian company Cheese Club. In addition, in 2005, one of the firms of the industry - Ukrproduct group - almost the first of all domestic companies held an IPO on the Alternative Investment Market of the London Stock Exchange.

keep pace with foreign investors and Ukrainian companies. Thus, among the most active buyers in the industry are former owners of Aval Bank (Fedor Shpyg, Alexander Derkach, Jacob Smoliy, Sergei Vovchenko, Michael Gorovenko, Ivan Voloshchuk Ivan Pinchuk, Igor Sloboda, Gregory Sheludko and Dmitry Voloshko). Over the past few years, entrepreneurs have acquired nine companies located in various regions of Ukraine. Another collector of assets has become Milkiland-Ukraine . In 2008, the company even went to Russia's market After either buying it Ostankino Dairy Plant for $ 41 million As a result of the aggressive policy of two Ukrainian companies mentioned in 2009, managed to take control of one third of cheese production in the country. But the further course of events confused investors all the cards.

tasty and cheap

As soon as the fall of 2008 first came upon hard times, Ukrainian consumers have decided that the cheese - still more luxury than a necessity. Following 2009, as predicted by the American Research Institute, FAPRI, Ukrainians will reduce the consumption of cheese by 3%. It would seem an insignificant reduction, but it happens the first time in the past ten years. And since the producers were preparing for a completely different scenario, the warehouse became overcrowded products marketed in the coming months will be extremely difficult.

Along with the general decline in interest of foreign businesses to invest in the Ukrainian assets that led to a sharp drop in the value of enterprises in the cheese-making industry. As an illustrative example, an analyst at investment company Dragon Capital Tamara Levchenko shows the value of the assets of the company Ukrproduct group, which is present in the range of hard cheese. Since it is listed on the stock exchange, its capitalization is easy to calculate, based on stock price. Thus, for the period from 16 September 2008 to September 15 this year, the company's stock price has fallen to 3.7 times - up to GBP15. Based on this approval, we can assume that with the economic crisis of the assets in the cheese-making industry of Ukraine dropped in price in about three or four times.

Naturally, this situation decided to take advantage of foreign investors. Over the past few weeks it became aware of two transactions in cheese market. Thus, Kazakhstan's dairy company Agroproduct Asia acquired Velikoburlutsky Cheese Plant. The second transaction was the purchase by Renaissance Group team of investors, with the investment company Veles Capital, the controlling interest in the company Cheese Club. In Renaissance Capital Ukraine, acted as sole financial advisor to the transaction, reported that at the time of the sale of the Cheese Club is Kanevsky Creamery, as well as the distribution network and trading house club cheese (which owns the rights to the trademark).

from all over the world

Experts do not exclude that in these transactions follow. Since the beginning of the crisis in the dairy market witnessed a fall in prices - says Vasily Vintonyak, director of consulting company Infagro. - But for a month as prices have x box in top on almost all dairy products. Rather, the crisis has reached the bottom , and investors began buying cheapened assets. Problems with working capital, lack of funding, inability to borrow or pay off the loan - it pushes the owners of assets in the industry to the sale or merger, - said Tamara Levchenko.

potential buyers can be divided into three groups. First, it is the companies from CIS countries, particularly Russia and Kazakhstan. The interest of investors from the CIS to the Ukrainian assets in the near future will be high, - says Alexey Raschupkin, vice president of investment banking department of Troika Dialog Ukraine. Russia and Kazakhstan are the main buyers of Ukrainian cheese. According to Tatyana Anglers, a leading expert of the Institute for Agricultural Market Studies (Moscow), in 2008 the Ukrainian products in value terms, took part in the $ 453 million (in prices of wholesale level) for all Russia's market cheese ($ 5.3 billion).

The demand for Ukrainian products more or less stable and not too falls even for a higher price than the competitive products from Belarus and Russia cheeses. According to Basil Vintonyaka, now in Russia in opte traditional Ukrainian cheese costs about 135-145 rubles /kg, which is higher than the price of Belarusian and Russian cheeses. It would seemthat during the economic crisis, the consumer will choose the cheaper product, but the Russians decided not to change its traditional taste preferences.

According to State Statistics Committee of Ukraine in January-June of this year Ukraine exported to Russia about 27.7 thousand tons of cheese, that only 12.5% less than the same period last year. During the same period in Russia, according to the Federal State Statistics Service, were fired just over 220 thousand tons of this product. Therefore reasonable to assume that among the buyers in the first place would be Russia or the Kazakh businessmen.

However, experts interviewed by WA, believe that European investors will acquire Ukrainian enterprises. They are the second group of potential buyers. I do not think that buying the company Cheese Club will start the long-term trend of buying up dairy enterprises by investors from the CIS countries and Russia, - says Tatiana Anglers. - Russian investors today are interested in its own market. In recent years they have been actively investing in cheese production in Russia because the demand for them grows. This year will launch a dozen new projects. constrained by the crisis as soon as the situation will improve, we can expect another influx of investment. Basil Vintonyak convinced that the Russians are now paying more attention to the Belarusian market. Unlike Ukraine, Belarus is on the increase production of quality raw materials for processors (raw milk), - explains the reason for such purposes Vintonyak.

According to Basil Vintonyaka, Cheese Club was interesting for a French company Lactalis, as well as German Hohland.

The third group may include customers who buy fallen in price assets with a view to their subsequent resale. These are companies finding themselves in difficult financial situations, for example, unable to repay loans. An investor who buys a company actually buys his debts, as the previous owners get nothing in return, - says Tamara Levchenko. This expert noted the intensification of such investors in recent times. What, in general, it is not surprising. Indeed, despite a crisis, optimistic. It will take ten years - and the Ukrainians in the diet of cheese consumption will grow by 29%, and shipments abroad - and at all 30%.

I do not expect the arrival of major investors

Sergei Vovchenko, CEO, Dairy Alliance

Is the manifestation of the tendency of a new wave coming on the market of foreign investors last two deals to buy cheese-making enterprises?

- I think that talk about that in the next six months or a year at the Ukrainian market will come Cheese serious investor. impossible. I do not expect this, since both in Ukraine and throughout the world are now an economic crisis. I think that the deal on the Cheese Club carried out under the pressure of financial problems. The proceeds will go to debt repayment. If it came to serious German, French, Dutch or Swiss cheese-maker, it would be a sign that strategic investors have come to this market.

Here is an example of Milk Alliance - the past few months to no one approached us with a proposal to buy the company. Moreover, we are actively modernizing their plants.

But in a crisis, asset prices fall. This may attract new investors …

- Yes, so you have to buy. Need to buy when cheap and sell when expensive. But … Are we now sell the business? No. May sell only those who despair. At present, many people wanted to sell did that among the owners of small dairies, which can be regarded as procurement items. Such proposals are. I recently phoned from the Zhytomyr region, offered to buy a small plant in one of the regional centers. But he is not interested in us. Buy no more planning. We actively invest in already acquired companies. Each year, put on 100 million UAH.

Why do you think that no sooner than six months or a year on the market is waiting for new investors?

- because by that time had themselves Ukrainian cheesemaker will go to serious investors and invite them to cooperate. Without it, the arrival of foreign investors expect very difficult. This applies to us. With the tightening of global competition for cheese withdraw only at internal opportunities are very risky. Can be easy to lose the entire business.

In the future, we will go at least an IPO, to continue to attract a strategic investor. This will ensure the economic sustainability of business. For example, if Russia will close the border, the Ukrainian surplus cheese, accumulated in the warehouses, have nowhere to put it. To be honest, it would seriously complicate the situation. Strategic foreign investors will be able to expand the geography of sales.

When the Dairy Alliance plans to enter the IPO?

So far we have not seen a specific date. In 2007, we thought that in 2010 made an exit at an IPO or sell a company a serious strategic investor. Now I can say that theoretically we can go to IPO within three years, and fully sell the company - not earlier than five years.

We can not sell the company to complete the modernization of enterprises. For example, we are now actively investing in sewage treatment factories, as in Europe, paying special attention to environmental standards. Unfinished upgrading of sewage treatment will give us a major downside to the price of the company.

At any IPO shares intend to sell?

- usually sell up to 25%. Such a package can implement to avoid losing control of business.

do you think, what European companies will become strategic investors in Ukrainian companies Cheese?

- First come the powerful Russia's Corporation. And only then, pouring money here, raising the level of capitalization, is on the other hand resell western companies. But it will happen no sooner than ten years. In the West, a completely different mentality, so the French, the Dutch work hard in Ukraine, the Russians are much easier.

In your opinion, how much cheaper in Ukraine assets in cheese-making industry?

- It is difficult to speak in the present conditions of prices. Now no one can use the multipliers that were used a year ago. I believe that if the company were worth at least twice as expensive.

After the ban on deliveries of cheese from Ukraine to Russia in 2006, many analysts say that our manufacturers will be forced to reorient the sale of products to other countries. But this actually happened. Why Ukrainian cheese-making industry is not diversified sales channels of its products?

- The whole problem as supplied to the processing of raw materials. It is difficult to hold even the market of Russia due to high demands on quality of Russians. With regard to Europe, then there must deliver the products produced from high quality raw material, which is not in Ukraine.

Where else can you ship? In Belarus, its products enough. Russia market is limited. Also there we strongly compete with the same Belarusian products. In Russia, our cheese is sold in opte of 130 rubles /kg, and Belarusian - 90 rubles /kg. The difference is colossal. True, they have the quality slightly worse. But in a crisis more than a consumer looks at price than quality. In Asia, not accustomed to consume cheese in those volumes, that in Europe. In Africa, the market is occupied by companies from Argentina, New Zealand, which supply products at prices lower than Ukraine. Therefore, it is hoped that our politicians will agree that there are no barriers to trade with Russia.

also need to rely on its own market. For consumption in our two times lower than the average in Europe. So there is much more to develop in Ukraine. Consumption of cheese will grow. And in Russia, too. I think that in the next five years Russia will need in our cheeses.
 
 

Dmitry Ulyanitsky

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