Linked In
News In
Linked In

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Shares in Russian grain port group fall on debut

Twitter Linkedin

Shares in Novorossiisky Combinat Khleboproduktov - the port group which serves the likes of Cargill and Louis Dreyfus and is attempting to exploit rising Russian grain exports by 2023 - suffered a weak debut session, falling by 10%.

Shares in Novorossiisky Combinat Khleboproduktov (NHKP), or Novorossyisk Grain Plant, owned 51% by state-controlled grain trader United Grain Company, closed at 459.00 roubles on Tuesday.

The price was well below the 512.00 rouble issue price announced earlier in the day, towards the top end of the range of the IPO price range 444-518 roubles, and giving the group a stockmarket value of $486m.

It also contrasted with a modestly positive day for Moscow shares, with the benchmark Micex index closing up 2.0%.

Turkish setback

The flotation ends a somewhat difficult route by NHKP to market, with the IPO repeatedly held up, most lately by concerns over the potential fallout of worsened relations between Ankara and Moscow after Turkey downed a Russian fighter jet.

Turkey is one of the top buyers of Russian wheat, and NHKP had to hold talks to reassure potential investors over the fallout from the decline in Russo-Turkish relations.

In fact, Turkey tied as the third largest destination for grain shipments from NHKP's operations, at the deep water Black Sea port of Novorossiisky, which trades its history back to the late 19th century, when became the site for what was then the world's second-ranked grain elevator, with storage for 49,000 tonnes.

Top destinations for NHKP-loaded grain were Egypt, with a 21% share of the 3.3m-tonne shipped, Saudi Arabia with a 20% share, and Jordan and Turkey with 8%.

Expansion plans

The shares give investors a chance to exploit Russia's growth as a grain exporter, which NHKP said had grown by 10% a year since 2006, growing from 13.7m tonnes to reach 30.1m tonnes last year.

And exports are "expected to reach up to 40m tonnes" by 2023, the group said, seeing its own volumes rise by some 1.5m tonnes over the period, assuming it maintains its market share.

In fact, NHKP has plans to expand its capacity to reach 6.14m tonnes by 2018, up from 3.40m tonnes today, with storage capacity hiked by 110,000 tonnes to 250,000 tonnes, and infrastructure improved to allow it to take ships of 80,000 tonnes, up from 72,000 tonnes today.

'Remarkable milestone'

NHKP also owns its own trading and flour output assets, although it is the shipping business which provides far better margins, of 72% last year, compared with 6% in trading and 1% in production.

Alexey Chemerichko, the group's chief executive, earlier on Tuesday said that the flotation was a "remarkable milestone in the development" of the group, which had attracted 180 orders from investors, including 110 individuals.

"As a result of bookbuilding, the final price was set near the top of the price range," Mr Chemerichko said, unveiling the issue price, which the group had intended to unveil on November 30, only to delay the announcement to December 8. and then to today.

Some 10.8% of the company was put up for offer by Cyprus-registered Belcarra Services, its complete holding.

United Grain Company retains its stake of 51%, with Ziyavudin Gadzhievich Magomedov, the billionaire who controls oil-to-metals company Summa Group owning 18.5%.

Summa Group also owns 50%, minus one share, of United Grain Company.

By Mike Verdin

Twitter Linkedin
Related Stories

France cuts wheat export hopes, after slowdown in shipments to non-EU buyers

The EU’s top wheat producer lowers hopes for its export recovery, noting strong competition with the likes of Argentine, US supplies for buyers

Gasc's Romania purchase offers false dawn over kicking Russia habit

The Egyptian agency’s first purchase of non-Russian wheat since August was down to rising shipping rates - which will end up favouring Russia even more

Morning markets: Grains stage a recovery. Will it last?

Corn, soybean and wheat futures start Wednesday making headway which has been difficult to come by of late. Cotton gains too

Evening markets: ags overlook crumbs of comfort in Wasde to set fresh historic low

The Bcom ag commodity subindex ends at a fresh record low, as US export fears overtake upbeat interpretations of corn, cotton estimate revisions
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069