Co-owner of Yota sold his agricultural business

Sergey Adoniev quitted the agricultural business by selling a controlling stake in the manufacturer of vegetables, HGT company, in which he invested three years ago, to his partner. The partners might have negotiated the deal even at the start of the project.
Origin source
Lucky moment

Yota Devices co-owner Sergey Adoniev sold his stake in Hothouse Growth Technologies (HGT) to his partner Sergey Rukin. The director of the investment fund Marsfield Capital (which manages the assets of Adoniev) Ekaterina Lapshin and representative of Sergey Rukin told RBC about it. According to them, Rukin consolidated 100% stake in OOO UK HGT, having bought from 80% of the company from Adoniev. 

According to SPARC, currently Rukin owns 50% of OOO UK HGT directly and 50% through OOO HGT Holding. The latter entity until January 24, 2017 belonged to Adoniev. 

RBC sources refused to name the transaction amount. However, according to Lapshina, the fund left the project with gains. Earlier, she told RBC that Marsfield Capital target rate of return was 25-30% on the horizon of three to five years. "We received an offer from our partner and found it acceptable. We are in the project since 2013, so we were ready to go," added Lapshina.

HGT spokesman told RBC that now is "a very good time to carry out such a deal" because Marsfield Fund invests in projects with the expectation of obtaining profitability in three to five years. Meanwhile Sergey Rukin is a strategic investor and has always regarded the HGT as a long-time project. All the announced plans for the construction of new complexes remain in force, stressed the company's representative.

Non-classical deal

HGT is a major player in the vegetable market of Russia. Now the company has two greenhouse complexes in Moscow and Tyumen regions, with the total area of 29 hectares, where every year 23 thousand tons of tomatoes, cucumbers and salads are cultivated. According to Forbes, the Moscow Region project cost the company 2.6 billion rubles, and Tyumen — 2.2 billion rubles. Note that Adoniev participated in the project only financially, while Rukin was also responsible for the operational management.

Total funding at the start of the project amounted to more than $100 million, said Lapshina. Of these, about 20% came from the shareholders money, and the rest from bank loans.

By mid-2017 the company plans to open a third greenhouse complex, in Rostov Oblast, which will increase its production capacity to 35 thousand tons. And by 2019 the company expect to double the growth, to 70 thousand tons, which will ensure 5% of the Russian market of vegetables grown in greenhouses, as follows from the press-service of the company.

Against the background of the devaluation of the ruble and the food embargo, many companies are actively investing in the agricultural sector, reminds the analyst Timur Nigmatullin at IK Finam. However, in the coming years, it can lead to overstocking of the market and lower average margins of manufacturers, especially with the removal of sanctions and the strengthening of the ruble, the expert warns. Today, he estimates that the market value of 80% of HGT excluding debt is at least 3-5 billion rubles.

The transaction is nonclassical because normally investor prefers to quit the business after it reaches its design capacity and start generate cash flow, says the head of the Economic Forecasting Center of Gazprombank Daria Snitko, referring to the unfinished complex in the Rostov region. Thus shareholders can realize the agreements that were they still at the start of the project, believes Snitko.

Rukin and Adoniev who together with Albert Avdolyanom own 34,9% in Yota Devices through Telconet Capital, in 2016 had the 106th place in the list of the richest businessmen by Forbes with earnings of $750 million, met in the 1990s, through their mutual friend Vladimir Kehman. Adoniev was his partner in the company JFC, the largest at that time importer of bananas in Russia. And Rukin was Kahman's partner in building business center Aeroplaza in St. Petersburg.