“Trust” releases the bird – Newspaper Kommersant No. 165 (7366) of 09/08/2022

Bank of non-core assets “Trust” is preparing to get rid of assets in the poultry industry. In autumn, it is planned to put up for auction the enterprises of the Russian Grain Group of Companies in Bashkiria, previously owned by ex-shareholder of Binbank Mikail Shishkhanov, at a starting price of 6.3 billion rubles. Despite the decline in prices for poultry meat, investors remain interested in this business. But the disadvantages of “Russian Grain” market participants include the presence of low-income egg production and remote location.

“Trust” has completed the assessment and is preparing for the sale of the Bashkir agricultural holding GC “Russian Grain”, told “Kommersant” in the press service of the Bank of non-core assets. Bidding for an increase is planned to be held in the autumn, the starting price is 6.3 billion rubles. The lot includes a poultry complex with a capacity of 65,000 tons of meat and 750 million eggs per year, sites for growing parent flocks, a processing plant with a capacity of 25,000 tons of meat products per year, a feed mill, and 18,000 hectares of agricultural land.

Russian Grain came under the control of Trust in March 2019 in the process of merging with Rost-Bank. Previously, the agricultural holding was controlled by the ex-co-owner of Binbank Mikail Shishkhanov. The bank did not disclose the financial statements of Russian Grain Group of Companies, noting that the business generates operating profit.

Dmitry Bronnikov, deputy director of the large business department at Rosselkhozbank, says that Russian Grain is a fairly large asset and will be of interest to both federal and regional players. According to him, the group could potentially enter the top 20 broiler producers and the top five table egg producers. The presence of several directions for Russian Grain is an additional factor in the investment attractiveness of the business, Mr. Bronnikov believes.

Although the director of Sovecon, Andrey Sizov, notes that today the situation on the poultry market is rather complicated: the cost of poultry meat is declining against the backdrop of increased production and competition with pork. In the last week of August, wholesale prices for a broiler carcass in central Russia fell by 1.5% to 136 rubles. per 1 kg, which is lower than last year’s about 140 rubles. for 1 kg. According to the Ministry of Agriculture, in the first half of 2022, poultry meat output increased by 5.8%, to 2.5 million tons, pork – by 5.7%, to 2.1 million tons, year-on-year. An interlocutor of Kommersant in a large meat producer adds that the production of a table egg is more likely to scare off potential investors, since this is a low-profit business, and the market is not growing. In addition, the enterprises of Russian Grain are located in a region remote from the center, the Kommersant source adds.

Trust says that they are negotiating the sale of Russian Grain with both industry and non-core investors, without naming specific interested parties. As Mr. Sizov notes, if the asset may be of interest to buyers, then the largest companies in the industry, in particular the Cherkizovo group and GAP Resource. Cherkizovo says that poultry farming remains an attractive segment, which, with proper vertical integration, is of interest for investment. The group’s strategy involves development both through organic growth and possible acquisitions, and assets that can provide good synergies and have an adequate market value may be of interest, the representative of Cherkizovo added. The GAP “Resource” declined to comment.

Dmitry Bronnikov adds that the poultry meat market is more stable than the pork or beef market due to lower production costs. In addition, poultry farming is a promising direction in terms of export. Despite logistical problems, the volume of poultry meat supplies from Russia to foreign markets in the first half of 2022 increased by 37%, Mr. Bronnikov points out. The National Union of Poultry Breeders previously estimated the potential for poultry meat exports from the Russian Federation at 500 thousand tons per year. In 2021, deliveries were at the level of 290 thousand tons.

Alexey Polukhin