Friday, October 24, 2014

Asian companies vying for a minority share in Fiagril

The Fiagril, Mato Grosso company which operates in the segments of trading and processing of grains, is negotiating the sale of a minority stake to an Asian company, also in the field of agribusiness. The contribution for the purchase of this slice of the Brazilian company should be on the order of $ 400 million to $ 500 million and the Chinatex, Chinese State that acts on purchase of cotton and grain, is the strongest suitor, according to the value found. If confirmed, the operation will be the debut of the Chinese company in Brazilian assets and the second corporate change undertaken by Fiagril in a few months.
Struggling to develop their projects, the Fiagril appealed in March to Amerra Capital Management, American funds Manager snapped at 25% of the capital of Brazilian trading. At the time, Craig Tashjian, Director and a founder of Amerra, said that rising grain prices in recent years have restricted the ability of the company to use equity to pursue strategic investments-and the need for a partner who could inject capital became urgent.
Thus, the Amerra, who had made loans to the Fiagril, joined the business. It turns out that the profile of this Fund is not to have equity participation, so it was agreed that he would have six months to three years to leave the company. And it is then that comes into play the new partner.
A source familiar with matter told the value that there is "a small group" of Asian companies participating in the negotiation. Another source with knowledge of the operation, also detailed that the earliest conversations with Chinatex next to Fiagril. The indication is that this new partner will be able to buy the slice of Amerra and possibly an additional parcel. But it's not decided if the Amerra will leave the business or if you still keep a small part of the shares which it holds today.
Founded in 1989, the Fiagril began selling inputs, but soon launched an accelerated diversification of activities. Started trading soybean and corn a decade ago and, more recently, invested in seed production, warehousing and logistics-what demanded large volume of resources.
One of the biggest bets of Fiagril is the logistical corridor in the North of the country, where the company is dedicated to the structuring of Cianport, created in 2012 in partnership with the grain marketer Agrosoja. With a sum estimated at r $ 360 million, the Cianport will transport grain at a terminal at Miritituba, in Pará, to the port of Santana, Amapá. The forecast is that the work is put into operation in the second half of 2015, moving initially 500 thousand tons, which can reach 3.5 million in 2018.
The expectation is that the Asian partner, in addition to sustaining logistics investments, help pave the way to the Fiagril towards the outside. Currently, exports only 20% of trading originating from grain-the other 80% are within the internal market. The company's intention, indicate people familiar with the topic, is to reverse this scenario by up to five years, leaving the future of the company "more geared toward outside than inside".
Established in 1951, the postulant to purchase Chinatex is dedicated to the production, processing and marketing of grains and fiber. The State began to acquire Brazil soy in 2003, with increased aggressiveness in trading operations in the South of the country, but interest grew. For some time, came to consider installing a branch in São Paulo, project that did not advance.
Recently, representatives from two prospecting trips were Chinatex business to the country. On one such occasion, in July this year, the Chinese have been to Rio Grande do Sul seeking partnerships with cooperatives in the State. Information published by the Government show that the Chinese State Gaucho purchase about two million tons of soybeans annually from Brazil. China is the world's largest importer of soybean, with an estimated acquisition of 74 million tons in 2014/15 current crop, according to data from the u.s. Department of agriculture (USDA).
A source claims that the sector graduated Fiagril still has financial problems to solve, despite the recent contribution of American background. "The company has good size, but that is not cost-effective. She does volume, but makes no money, "he says. Other comments that launch to the market "was something predictable, since the company entered new business on many fronts".
The Fiagril still trying to raise funds from another American Fund to continue to plan to build a corn ethanol plant in Lucas do Rio Verde. According to the American press, the U.S. Farmland Fund, equity arm of Summit Group, negotiate with the Brazilian company an injection of $ 140 million to implement the power plant, with a capacity of 500 000 tonnes of maize crush per year, enough to produce up to 200 million liters of biofuel.
Headquartered in Lucas do Rio Verde, the Fiagril moves between 2.5 million and 3 million tons of grain per year, with a turnover of r $ 2.75 billion in 2013. Sought, Fiagril and Amerra preferred no comment.
Valor Economico News Item translated automatically
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