Investments went like clockwork – Newspaper Kommersant No. 169 (7370) of 09/14/2022

The family of the general director and co-owner of Transmashholding, Kirill Lipa, has interests in agribusiness. A related structure is buying an oil plant complex in the Volgograd region with a processing capacity of up to 700 tons of sunflower per day. The asset is distinguished by a good location near export terminals and a raw material base, but world oil prices are declining, and the domestic market is saturated.

Ordynskaya Grain Company (OZK) won the auction for the sale of the Dobry Spas oil plant complex in the Volgograd Region, follows from the bankruptcy register. OZK was established in March 2021 by 4A-Investments, 33.3% each of which is owned by Sofya Lipa, Aleksey Lebedev and Aleksey Belinsky through Temporia Invest, follows from the Unified State Register of Legal Entities. Sofya Lipa may be the daughter of Kirill Lipa, CEO and co-owner of Transmashholding (TMH), one of the largest manufacturers of railway rolling stock in the Russian Federation. Kirill Lipa himself owned a stake in 4A-Investments in 2021.

Dobry Spas was previously managed by Trade Union, which was declared bankrupt in 2021. According to its own data, the plant can process 700 tons of sunflower per day, includes capacities for storing 15,000 tons of seeds, 500 tons of oil and 400 tons of cake. OZK was the only bidder, offering about 74.7 million rubles for the asset.

Alexey Belinsky confirmed to Kommersant that OZK plans to acquire an oil plant and develop the enterprise. He noted that the project is financed by a group of private investors whose interests in the agro-industrial complex are related to the trade in agricultural products, the processing of grain and oilseeds. It was not possible to contact other co-owners of 4A-Investments Kommersant.

Director of Sovecon Andrey Sizov notes that this is a large plant located close to export terminals and a raw material base, and the Volga region is the main region for sunflower production in the Russian Federation. According to Mr. Sizov, taking into account restrictions on the export of oilseeds and a record harvest, the market situation is developing in favor of processors in the short term. Sovecon predicts a sunflower harvest this year in Russia of 16.8 million tons, which is 1.1 million tons more than a year earlier.

Director General of the Institute for Agricultural Market Studies (IKAR) Dmitry Rylko adds that there may be difficulties with the demand for oil on the world market, and exports are the main driver for the industry. According to him, prices for vegetable oils in the world have fallen by more than 1.5 times in recent weeks. At the end of last week, IKAR estimated the cost of Russian sunflower oil at $1.1 thousand per ton (FOB). And the domestic market is already saturated, Mr. Rylko adds. Sovecon reported at the end of August that oil prices in the world are affected by a high expected oilseed harvest, including in the Russian Federation, as well as a decrease in purchases of vegetable oils by China. The US Department of Agriculture (USDA) estimates the export of vegetable oils from Russia in the 2022/23 season at 5.44 million tons against 4.67 million tons a season earlier.

Mikhail Maltsev, Executive Director of the Oil and Fat Union, believes that the current situation is unlikely to favor the entry of new investors into the sunflower oil production market. Despite a record sunflower harvest this season and significant carryovers, competition for raw materials is fierce, he warns. According to Mr. Maltsev, against this background, players who develop deeper processing, including products from oil and meal, can be effective. The profitability of sunflower processors remains at the level of a few percent, he points out.

Another co-owner of TMH, Iskandar Makhmudov (ranks 31st in the Russian Forbes rating with a fortune of $3.6 billion), also has interests in agribusiness. The Cosminvest company, where the businessman owns 50% through Violan LLC, as of May 2022 owned about 210 thousand hectares of agricultural land, according to BEFL, which corresponds to the 26th place in the ranking of the largest landowners. In addition, Investcom, a company associated with Mr. Makhmudov, bought out the debts of AFG National, a large producer of rice, vegetables, grains, etc., and may gain control over its assets.

Anatoly Kostyrev