The EBRD is investing €50 million to increase capital of MK Group, as part of Agri Europe holding company, by subscribing to newly issued shares. The funds will allow the company to expand its farming and meat processing operations through investment in silo infrastructure, agriculture equipment and working capital financing.
Agri Europe is a holding company consolidating the activities of companies owned by the Kostić-family in sugar and meat processing as well as in farming operations in Serbia and Ukraine. The company consolidates MK Group (Serbian producer and trader of agricultural commodities), Carnex (leading Serbian meat producer), Sunoko (leading Serbian sugar producer and exporter) and AgroInvest (Ukrainian subsidiary active in primary agricultural production).
The group – a long-standing EBRD client – has achieved impressive growth of production, sales and earnings over the past few years with, for example, a compounded average growth rate of 21 per cent in the period 2009-2012. Unlocking the substantial further growth potential requires additional investment which will be supported with the funds provided by the EBRD.
A streamlining of the company’s strategy is to be complemented by improvements in corporate governance. Eventually, the commercial expansion and organisational restructuring are intended to lead to an IPO of the company, subject to market conditions and investors’ appetite.
Gilles Mettetal, EBRD Director for Agribusiness, said “This acquisition represents our first equity investment in primary agriculture in Serbia and is an expression of our confidence in the company and the sector. The EBRD believes that we have a special role to support the development of a long-standing partner of ours such Agri Europe.”
Matteo Patrone, EBRD Director, Serbia, added: “Equity financing, particularly in primary agriculture, is not widely available in Serbia and we think EBRD can play a significant role in filling the gap. Moreover, this investment is in line with our view to gradually increase private sector contribution to our portfolio in the country.”
Miodrag Kostic, co-owner of Agri Europe, said: “The fact that the EBRD is becoming a shareholder in our company is a major achievement which goes beyond financials. We also see it as recognition of our future strategy and expect the EBRD to play an important part in its implementation. For Agri Europe having the EBRD on board represents a big step forward. For Serbia, it will be important foreign direct investment.”
In the agribusiness sector alone, the EBRD’s net cumulative commitments since 1991 have exceeded €7 billion in over 450 projects in its region of operations. In Serbia the EBRD has cumulative commitments of €3.1 billion since 2001 and a portfolio of €2.3 billion in 124 projects.