Saudi private $533 mln agri-business firm eyes 2010 start

Reuters | 08 Sep 2009

RIYADH - A group of private Saudi investors said they plan to start next year a company with a 2 billion riyals ($533.3 million) capital that will invest in farm projects mainly abroad.

Usamah al-Kurdi, who heads the founding committee of the International Agriculture and Food Investment Co (Agroinvest), said 25 percent of the capital will come from founding shareholders while the remainder will come from institutional investors and a public offering.

"We are interested in public participation in our company .

An IPO will be launched soon," he told reporters late on Monday. He declined to say how much capital has so far been raised by about half a dozen individual investors who form Agroinvest's founding committee.

The announcement is the latest in a series of similar moves by private investors in the Gulf Arab region where food security has topped the policy agenda after rampant inflation in 2008 underscored the peninsula's dependence on imports and forced these countries to contemplate investment abroad to ensure supplies of staples like rice and wheat.

Several Saudi firms have already started farm investments in countries stretching from Indonesia to Ethiopia after the government decided last year to gradually axe wheat production in a bid to conserve water resources.

Agroinvest plans to invest 500 million riyals in the domestic Saudi market, mainly in the poultry and aquaculture businesses, said Samir Kabbani, a member of its founding committee.

For its investment abroad, the company will focus mainly on rice, maize, wheat, sugar as well as related logistic infrastructure such as storage facilities and supply chains, Kurdi said.


Kurdi said Agroinvest hopes to attract capital from state-run funds such as Public Investment Fund (PIF), the investment arm of the finance ministry, and pension funds the General Organisation for Social Insurance (GOSI) and Public Pension Agency, Kurdi added.

"We also hope that the newly-formed farm investment company that is wholly-owned by the government with a capital of 3 billion riyals will also show interest. That is something in our agenda," Kurdi said.

He was referring to the Saudi Company for Agricultural Investment and Animal Production (SCAIAP) which is wholly-owned by PIF and whose inception was approved by the government in April to invest in projects to ensure food security and help stabilise food prices domestically.

Founding member Kabbani said the government-owned company "will not go it alone."

"We know that there are possible partnerships with private Saudi firms like ours," he told Reuters.

A pre-requisite for any investment abroad would be to allow Agroinvest to export at least 70 percent of the crop cultivated in the foreign country where the company will invest, he added.

"We are also waiting to hear back from the government over the percentage of the crop that they will buy from us. A decision on this crucial point is expected to be announced pretty soon," Kabbani said.

Agroinvest is in "advanced negotiations" with some African countries for projects to cultivate maize and rice, he said.

"We are also in talks over a partnership with a Kazakh company that owns 100,000 hectares of wheat-planted land," Kabbani said. He declined to elaborate.

Asked to name countries favoured by his company for investments, Kabbani cited Turkey and Ghana.

"There are other countries but the key criteria of choice are crystal-clear legislation and political stability," he said.
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