Joint Venture: Grain Trading Strategy
The Partner
A successful Ukrainian Agricultural operation is looking to expand its grain and commodity trading operations, and commence a buy-and-hold strategy which requires financing - and a JV partner to share in the operation. The Operator operates its own farmlands, inland Silos, logisitics, port Silos, ports and a small fleet of vessels and and grain trading arm. Operating the largest private port facilities on the Black Sea, their port facilities export circa 3MM Metric Tonnes from their Bulk facilities and have augmented their operation by implementing Containerized stuffing and shipment facilities which are to be expanded in 2012, the only port-based industrialized container stuffing unit on the Black Sea.
The Operator is rapidly expanding both its Bulk Port and Containerized and alongside its normal operations is fully committed to these projects, limiting its ability to implement its buy-and-hold grain strategy on its own, creating an opportunity for a cash-equity partner.
The Project
The J.V. Vehicle will purchase Grains in Ukraine at the annual cyclical low price, and hold and store in in-land Silos owned by the Partner. At the cyclical peak the J.V. Vehicle will sell its stock, and will be transported through the partners logisitics chain to its port silos and its port facilities.
The Partners client base includes both the majors: Bungie, Druyfuss, ADM, Cargill, Glencore as well as independent buyers in North Africa, Middle East and Asia. 3MM MT transit through its port each year - and has exit buyers requiring grain supply all year round.
Initial Project Scope
It is envisaged that the J.V. will start small, approximately 40,000MT for the first year, requiring approximately 6-7MM from the financing partner with returns to the JV estimated at 30-80% depending on prevailing international market conditions.
Partner Commitment
The Ukrainian Partner is prepared to reverse into the offshore SPV (yet to be created) one of its Agricultural Facilities – Kononovka, Cherkassy. Cherkassy is a major crop production region in Ukraine, within the Black Earth production region of Ukraine, yet close enough to the Southern Coast to minimize logistics and transportation costs to Odessa.
Benefits include:
- Existing grain warehousing storage for 40,000 MT
- Additional warehousing to be renovated for further storage
- Planning permission for modern elevator & silo for a further 50’000 MT capacity. In fact this could be increased up 200’000 MT storage if desired
- Inventory of bulk road transport trucks.
- Railroad access at the door
The Partner would also enter into a long-term agreement with the JV Trading Company to provide guaranteed export capacity through its Port Terminal at preferential unit rates and conditions.
For more information and to being discussions with the Agricultural Group in Ukraine contact: Adam Ferguson at This e-mail address is being protected from spambots. You need JavaScript enabled to view it