Ceagro Eyes Local Financing for M&A

Grupo Los Grobo’s Ceagro do Brasil unit is considering raising up to BRL300m ($150m) in Brazil’s domestic market, through the sale of debentures or Certificados de Recebiveis Imobiliarios (CRI), CFO Antonio Oliva Neto tells LatinFinance. The grain producer needs funds to buy stakes of agriculture input retailers and to address working capital needs. Ceagro most recently announced the purchase of a 60% stake in Synagro, an inputs retailer and seller of agrochemical, fertilizer and seeds. Thus far, it has used pre-export finance facilities and internal funding for organic growth and acquisitions. An international bond has also been analyzed, but is not an option in the short-term, Oliva says, as Brazilian peers have been paying high rates of 9%-10% for dollar funding. “When you look at our peers in the market and coupons they are paying, it doesn’t make much sense,” he says. It also announced a 50-50 joint venture with Brazil’s Peninsula Fertilizante to operate a fertilizer mixing plant, Ceagro’s first investment in the segment, and the approval of construction of 2 new warehouses in the states of Mato Grosso and Tocantins. In January, Mitsubishi agreed to purchase a 20% stake in Ceagro for about JPY3.5bn ($45.61m). Ceagro focuses on financing producers, production, storage and supplying the local market, operating in Brazil, Argentina, Uruguay and Paraguay. It seeks to leverage the Mitsubishi deal to become a centralized grain originator in the countryside, and also to export grain to new destinations and make further acquisitions.