Romanian agribusiness group Agricover launches EUR 85 mln IPO on Bucharest Stock Exchange

Agricover, one of the biggest groups in Romania’s agriculture sector, has launched an initial public offering (IPO) to list its shares on the Bucharest Stock Exchange.

The total value of the offering, which includes new shares issued by the company and existing shares sold by the current shareholders, amounts to RON 416.7 million (EUR 85 mln), making it one of the biggest private IPOs ever carried out on the Romanian capital market.

The IPO, which is managed by Wood & Company together with local brokerage firm Tradeville, started on May 4 and ends on May 16.

The total number of Agricover shares on sale is 833.3 million and the maximum asking IPO price is RON 0.5. The final price will be set at the end of the public subscription period, based on buying orders submitted by institutional investors.

A tranche of 10% of the total number of shares on sale – 83.3 million – is reserved for retail investors, who can only place orders at the top price of RON 0.5. However, in the end, the price paid by individual investors will be the same as the one paid by the institutional investors. The managers have the option to increase the number of shares sold to individual investors by as much as 83.3 million if the retail tranche is heavily oversubscribed.

New money will go into agrifinance business

Agricover will sell 277.8 million new shares in the IPO for which it is looking to get as much as RON 135.8 mln (EUR 27.5 mln). The majority of these funds (80%) will go into the group’s agrifinance division Agricover Credit, which specializes in granting loans to farmers. The group is also looking to capitalize its new subsidiary Agricover Technology, which specializes in financing agritech startups.

The group’s majority shareholder, Jabbar Kanani, is looking to sell over 404 million shares for RON 202 million (EUR 41 mln). After the IPO, he will still own 57.44% of the group’s shares.

The other selling shareholder is the European Bank for Reconstruction and Development, which is looking to cash in part of its investment in Agricover Holding. The EBRD is selling 151.2 million shares for RON 75.6 million (EUR 15.3 mln).

Pre-money valuation: 10 times the 2022 net profit

At the maximum IPO price of RON 0.5 per share, Agricover Holding is valued at RON 950 mln (pre-money) or RON 1.08 bln (including the new shares old in the IPO). The pre-money valuation stands for 10.4 times the net profit recorded by the group in 2022, which was RON 91.3 mln (EUR 18.5 mln).

Last year, the group’s revenues amounted to RON 2.55 bln (EUR 515 mln), almost 50% higher than in 2021. The agribusiness division Agricover Distribution, which sells inputs for agriculture such as fertilizers, crop protection products, seeds and fuel, recorded a gross margin of RON 86 mln, up 21% versus 2021. Meanwhile, the agrifinance division Agricover Credit, which grants loans to farmers, recorded a net income of RON 106.7 mln, up 22% year-on-year.