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Russia’s VTB finds partners for growth of grain business

Reuters, 05.05.20

Russia’s second-largest bank VTB has sold half its Russian grain business, consolidated in Demetra Holding, to two Russian firms for an undisclosed sum, as it expands the business further, it said in a statement on Thursday.

The state-controlled bank became the largest operator of Russia’s grain export infrastructure and a major grain trader after a series of acquisitions in 2019. It has said it plans to expand its grain business further and then exit.

Agronova, which develops farm projects in Russia’s southern Krasnodar region, bought a stake of 25%, while Marathon Group, an investment firm, has a stake of 24.99%, VTB said.

VTB said it kept shareholder control of the business, but will share operational control with the new partners. It said it had been looking for partners for its grain business since last year.

“We expected something like this to happen: these are Russian investors, and they are little known to grain market,” Dmitry Rylko at the IKAR agriculture consultancy told Reuters. “It is a pure portfolio investment, it does not change the landscape of the sector.”

VTB said in the statement that it plans to develop the grain business with these partners “aimed at improving the competitiveness of Russian grain on international markets.” Russia is the world’s largest wheat exporter.

“The experience of cooperation between VTB and our partners in other projects creates good prerequisites for a new stage of growth of the holding’s business,” Vitaly Sergeichuk, deputy head of VTB’s client relations department in market regions, said in the statement.

Marathon is co-owned by a Russian businessman Alexander Vinokurov and his partner. Both VTB and Marathon have stakes in a Russian food retailer Magnit.

VTB and the owner of Agronova, Russian businessman Taimuraz Bolloyev, previously cooperated in the development of one of Russia’s southern airports.

Marathon has stated that it was interested in investment in the agriculture sector previously, but it remains unclear what the company will bring to it, said Andrey Sizov at SovEcon agriculture consultancy.

“The deal will not have any major effect on the sector, at least not in the short term. From my point of view, the problem of having VTB as a huge player, which controls a large part of the market, remains as it was for the sector,” Sizov added.

Agronova declined to comment. Vinokurov did not reply to a Reuters request for comment.

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