Mubadala mulls two big Russian agriculture investments

It would make the acquisitions through Russia’s state-backed Russian Direct Investment Fund (RDIF), with which it set up a US$2bn fund three years ago.

Agriculture investors are cheered by Russia’s growing supply of home-grown produce since lawmakers banned Western food imports two years ago in retaliation to sanctions imposed on it after its excursions in Ukraine. 

“Russian agriculture… is attractive to foreign investors due to the high growth rate in the domestic market and exports​,” said Kirill Dmitriev, chief executive of RDIF, said in a statement on Thursday. 

Mubadala’s RDIF fund is considering acquiring part of EFKO Group, a major Russian vegetable oil and fat manufacturer, as part of a consortium of investors with roughly US$158m to spend on the deal.

One of Russia’s top three agriculture businesses, EFKO also owns Russia's only deep-water sea terminal for the transshipment of vegetable oils, which allows it to be biggest exporter-importer of vegetable oils in Russia.

In a statement, the RDIF said the funds would be used to expand land holdings and increase production, as well as for other infrastructure. EFKO would use the money to expand its markets in the former Soviet Union countries, as well as into the Middle East and Asia markets.

The consortium may also invest up to US$140m in AFG National, Russia’s leading vertically integrated producer and distributor of rice which is also successfully developing capacity within the fruit and vegetables growing sector. 

AFG National plans to use the investment to increase agricultural production and expand its land bank. 

Pundits are thankful that Abu Dhabi is taking an interest in Russia at a time when its economy is being ravaged by sanctions.

“Asia and the Gulf region are the only potential investors we still have while Western investors hold back from investments for obvious reasons​," ­Andrey Sizov, the head of SovEcon agriculture consultancy, told CNBC television.