Ukraine Unrest Halts IPO Plans for Its Biggest Farm Company

Political violence in Ukraine forced Oleg Bakhmatyuk to postpone plans for the initial public offering of UkrLandFarming Plc, the country’s biggest agricultural company.

“Not a single investor will invest in Ukraine now,” Bakhmatyuk, the company’s chief executive officer, said by phone from Kiev yesterday. “An IPO entails confidence in the territory; there is no such confidence.”

Bakhmatyuk had planned to sell shares in both Hong Kong and London, he said. There’s a chance an IPO may happen by the end of 2015, potentially in either location, if the situation in Ukraine improves this year, he said. Bakhmatyuk plans to sell between 20 and 25 percent of UkrLandFarming.

Ukraine’s military resumed its campaign against pro-Russian rebels this week after they refused to join a cease-fire. Ukraine’s government bonds slumped yesterday as the end of the cease-fire raised the likelihood of a prolonged conflict that was sparked after Russia annexed Crimea in March.

The Ukrainian Equities Index climbed 0.5 percent in June, its smallest monthly increase this year after surging 26 percent in February amid the ouster of pro-Russia president Viktor Yanukovych. The gauge is up 34 percent in 2014, compared with the 4.9 percent gain in the MSCI Emerging Markets Index and a 1.4 percent drop in Russia’s Micex Index.

ULF, as Bakhmatyuk’s Cyprus-registered holding company is known, manages 654,000 hectares of black soil - an area the size of the U.S. state of Delaware - with output ranging from grains and beet sugar to beef, according to the company’s website.

Cargill Inc., the Minneapolis-based agricultural products trader, bought a 5 percent stake in ULF for $200 million in December. Bakhmatyuk owns the remainder, he said.

Hong Kong

“Today, markets are closed to Ukrainian companies, for both bonds and share offerings,” he said. “The war has cut the access to the market.”

While it makes sense for the stock to trade in Hong Kong if the company develops a strong presence in China, should ULF expands faster in the Middle East and Africa it will hold the IPO in London, he said.

Investors of Avangardco Investments Plc, ULF’s subsidiary, will be offered an option to replace their London-listed shares with UFL stock, Bakhmatyuk said. Shares of Avangardco have slid 16 percent this year.

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