Trigon Agri revealed plans to list its dairy business, newly expanded through the purchase of Estonia's top dairy farm, maintaining the strong pace of corporate activity in agribusiness absent in many other sectors.

The Black Sea farm operator, which in February revealed ambitions to become the top dairy producer in "Europe, including Russia", said on Tuesday that it was maintaining a focus on "expansion of dairy operations through new acquisitions".

The latest purchase, which closed in April, of the Vaatsa farm in Estonia, lifted the group's dairy herd to 3,800 milking cows, on 9,640 hectares of land.

The division's access to capital markets may be enhanced through a separate listing, Trigon added, extending a theme muted earlier in the year of attracting external investment into the dairy division.

In February, the group said that it was "in early stage discussions with external investors about them making co-investments into Trigon Dairy Farming", which legally is a separate company to Trigon Agri, if wholly owned by the group.

Flotations and acquisitions

The plans for a separate listing follow a similar proposal by JBS, the world's top meat group, to float its Vigor Alimentos dairy division, whose prospects for expansion are seen by some analysts as currently limited by the debt burden carried by the parent company.

Louis Dreyfus Commodities, the crop trading giant, on Monday said its 65%-owned LDC-SEV sugar and ethanol business, based in Brazil, was preparing for a potential listing.

Indeed, with Louis Dreyfus also revealing a $7bn warchest, and in the midst of purchasing US sugar refiner Imperial Sugar, while Glencore has bought Canada's Viterra and Japan's Marubeni is considering a purchase of US grain trader Gavilon, the agribusiness sector appears rife with corporate activity.

This contrasts with a slow start to deals elsewhere, with global mergers and acquisitions announced in the first quarter tumbling 35% to $390bn, according to Mergermarket.

'Very favourable financial terms'

Trigon Agri, which is also in the process of purchasing 30,000 hectares of land in southern Russia, said that its own acquisitions had to meet "stringent criteria" of returning at least 20% on equity, on an average basis.

"Some part of our business are already showing substantially higher return on equity," Joakim Helenius, the Trigon Agri chairman, said.

The Estonian dairy purchase "was carried out on very favourable financial terms, and makes the investment case for our milk production subsidiary substantially more attractive", Mr Helenius said.

"The acquisition… takes us much closer to our declared goal of attracting outside third party investors to our milk production operations."

Finance costs

The comments came as Trigon unveiled an after-tax loss of E3.81m for the January-to-March quarter.

While revenues soared 34% to E10.3m, and the group broke into the black at the level of earnings before interest, tax, depreciation and amortisation (ebitda), the group reported "significantly" higher finance costs, up five times to E2.36m, following a SEK350m bond issue last year.

Trigon shares stood 4.1% higher at SEK 7.60 in lunchtime deals in Stockholm.

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