Ten years after the purchase of the company, the investor sold it to Singapore's Delta Wilmar CIS cheaper than it bought. Experts say that the market is now on the buyer's side.
The sale of Chumak became known last Friday. The deal was announced today by Dragon Capital CEA Tomas Fiala, who called it a successful exit from investment.
Chumak is one of the largest food producers in the country. It produces ketchup, mayonnaise, sauces, canned vegetables, tomato paste, pasta, juices and pickles under the same trademark. It also manufactures products for retail chains and HoReCa under its own brand.
For Delta Wilmar CIS, the purchase is of strategic importance.
"We have long wanted to reach the final consumer. It is more reliable and stable," said Dhruba Charan Panda, Chairman of the Board and co-owner of the company.
His company considered two options for solving this problem — Chumak and Torchin Product. However, the latter is owned by Nestle, which does not intend to sell it.
Delta Wilmar CIS owns a plant for the production of sunflower oil. Chumak specializes in retail sales. Sunflower oil is also used to produce mayonnaise that Chumak produces.
The new owner is counting on sales growth due to deliveries to China, Singapore, the countries of Southeast Asia and South Korea.
"We will increase our product line in such a way that vertical integration is built," said Yuriy Golianych, CEO of Delta Wilmar. The buyer plans to provide Chumak with raw materials at low prices from world markets.
The deal was likely to be more profitable Delta Wilmar than Dragon Capital. In 2008, Dragon Capital together with the East Capital Bering Ukraine Fund paid, according to expert estimates, $35 to $40 million for the 70% stake in Chumak. Mr. Fiala’s company received less than 50% and a partner more than 20%. At the time, Fiala said he was counting on a return on investment of at least 50% per year. Dragon Capital told that they sold almost 100% of Chumak to a Singapore company.
The cost of the transaction was not disclosed. But the head of the analytical department of the Concorde Capital investment company, Oleksandr Parashchy, said he believes 100% of the shares cost from $26 to $31 million.
The usual cost of this kind of transaction is EBITDA, multiplied by a multiplier of 5 to 6. Last year, this indicator for Chumak amounted to UAH 130 million.
Today in Ukraine is a buyer's market. Earlier, the head of the TAS group, Sergei Tigipko, who has been actively buying assets since 2014, said as much.
"The markets have gone crazy. What you need to build for hundreds of millions of dollars today can be bought for $4-5 million," he said.
"A good situation for the acquisition of assets exists now and we hope this situation will continue. Because when the risk decreases, assets will be harder to find and acquire at such a low price," agrees Oleksandr Pochkun, managing partner of Baker Tilly Ukraine.
Read also
Public consultations and restoration. What is Shulyak talking about behind the scenes
Ukraine's Recovery: How to Change Critically Low Citizen Engagement Indicators?
The future has already arrived: blockchain technologies in the global economy and everyday life
