Dragon Capital Places 20% Stake in Ukraine’s Leading Sugar Producer, Raising $42m
Kyiv, July 24, 2007 – Open joint-stock company Sugar Union UkrRos (UkrRos), Ukraine’s #2 sugar producer in 2006, has successfully placed 20% of its shares in an IPO, raising $42m among foreign portfolio investors. The placement gives the company a market capitalization of $210.3m.
Kyiv-based investment bank Dragon Capital acted as lead manager and sole bookrunner for the UkrRos placement, which attracted more than 20 investment funds and private investors from across Europe and the United States. In addition to listing on the PFTS (PFTS: UROS), part of the share package (3.6%) will be converted as Global Depositary Receipts and listed on the Frankfurt Stock Exchange to provide greater access to the stock for more investors and increase its liquidity.
UkrRos Supervisory Board Chairperson Serhiy Fedorenko says the company plans to invest the proceeds from the share placement to expand its land under lease from 40,000 hectares (ha) to 70,000 ha; modernize its sugar refineries to make them more energy efficient, and bring the quality of its products up to European standards.
“Carrying out the share placement is just the first step towards the creation of a truly public company and forms part of our medium-term growth strategy, which envisions doubling UkrRos’ share of the domestic sugar market, to 20%, by 2011,” Fedorenko says.
The transaction was registered July 23 on the PFTS, and early trading July 24 put UkrRos stock at UAH 11 ($2.18) per share, or 10% above the initial list price, implying a market cap of $231.4m.
“We think the timing of the share placement was very fortunate for UkrRos,” Dragon Capital Director of Investment Banking Brian Best said. “The high demand for shares of the company was stimulated by factors such as the forthcoming consolidation in the sugar industry in Ukraine, which should attract large multinational players to the market, as well as the expected privatization of land currently used in agriculture.
And naturally investors have taken into account the strong position of UkrRos in Ukraine’s sugar industry and its more than 10 years of experience working on the market.”
The placement of UkrRos shares makes the company the largest in terms of both volume of attracted funds and market capitalization when compared to other Ukrainian sugar companies: Astarta’s 20% share placement in August 2006 raised $32m in proceeds, or a market cap of $168m, while Dakor also placed 20% of its shares in May 2007 but for $21m, implying a market cap of just over $100m.
About the company:
Open joint-stock company Sugar Union UkrRos is the second-largest sugar producer in Ukraine, controlling 10% of total domestic production. The company operates 6 sugar refineries, which in 2006 produced 250,000 tonnes (250 kt) of sugar, and 11 agricultural enterprises leasing a total of 40,000 hectares of land. In 2006, UkrRos posted net sales of $155m and net profits of $37m.
Its development strategy for the 2010/11 marketing season estimates an increase in land under tillage to 140,000 ha, a doubling of the company’s share in total sugar production in Ukraine to 20%, or 450 kt, and a boost in net sales to $265m.
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