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VTB Capital announces that ADM Capital, a leading international private equity fund with 14 years of experience in emerging markets, has invested into its agricultural investment company Irrico in Southern Russia. The new investment will allow Irrico to implement its second stage growth strategy to extend its area of irrigation as well as vertically integrate into higher value products after having established a farming operation and successfully completed its first harvest in 2013. The project has shown good performance in accordance with the original investment plan, which allowed VTB Capital to demonstrate the quality of the investment and attract ADM Capital to join the company.
VTB Capital established Irrico in 2012, and ADM Capital is the second large institutional investor which has committed capital to this investment since the company’s inception. Jason Silm, Head of Agriculture investments at VTB Capital, who has over 20 years of experience in agricultural business and joined VTB Capital in 2011 from Macquarie Bank, will become the Chairman of Irrico.
The Irrico investment project is focused on acquiring large scale operating farms in Southern Russia, improving operations with modern machinery and management practices, and installing the latest irrigation technology. The irrigation infrastructure is supplied by Lindsay, a NYSE listed leader in the global manufacture and supply of irrigation equipment. Irrigation technology allows the production of high value soy and corn with low production risk and consistently high crop yields.
VTB Capital and ADM Capital will cooperate in attracting further investments into the project alongside the early stage investor North Caucasus Development Fund who executed its initial investment in January 2013.
The agricultural industry in Russia and CIS is an important economic sector with significant growth potential boosted by both increasing domestic demand for quality food commodities and the geographical proximity to large export markets such as China, the Middle East and North Africa.
Tim Demchenko, Global Head of Private Equity and Special Situations at VTB Capital, said: “As a fundamental principle of VTB Capital private equity strategy, we are continuing to invest in high growth projects and attract leading international co-investors to Russia. We have been successful in attracting international partners in multiple sectors of Russian economy including consumer, business services and real estate. The fact that ADM Capital is joining us in development of an agricultural project in Russia is a new precedent for our market. I’m sure that with our partners from ADM Capital, who have extensive international experience, we will be able to add further momentum to our investment and offer a good example to the sector”.
Andreas Boesenberg, Deputy Head of Private Equity and Special Situations at VTB Capital, noted: “From a global agriculture investment perspective Irrico has all of the elements required for success. We have built an industry leading team with both agricultural operational and investment credentials internationally and within Russia. This team is now successfully acquiring large scale farms, at compelling values and within close proximity to the major Black Sea export ports. These farms were once irrigated and we are installing value adding irrigation to dramatically increase crop yields and returns whilst lowering risk.”
Anthony Stalker, Head of ADM Capital in Europe, added: "ADM Capital is delighted to have made such a significant investment in Russia and into this sector. We believe that this investment will deliver substantial social and developmental benefit to the region with the bulk of the investment going towards the establishment of modern farming practices in this part of Russia. This investment would not have been possible without the considerable investment in time and personnel by VTB Capital and along with North Caucasus Development Fund we are very confident in our ability to continue to grow Irrico into a significant player in this sector."
ADM Capital has been investing in emerging markets for 15 years. Founded in 1998 during the Asian Financial Crisis, ADM Capital has developed strong in-country relationships with investee companies allowing it to build a lasting presence both in Asia and more recently in CEE, Russia, CIS and Turkey. ADM Capital has invested US$2.9bn in over 110 investments since inception - and currently manages US$1.6bn. ADM Capital’s operations comprise offices in London, Kiev, Istanbul, Almaty, Mumbai, Beijing and Hong Kong with a global team of over 50 staff.
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