Investment opportunity in a pig farm in Central Ukraine

Pig farm investment opportunity in Central Ukraine (projected capacity: 12000 live pigs per year); USD 2 mln investors welcome. 
 Ukraine has a deficit of pork meat, it has a strong demand for quality product but it is not available. Investors are invited to co-invest in a pig farm project (farrow-to-finish, so called full cycle of pig production). The farm is INACTIVE now, but all permits and approvals are in place, all norms and regulations met to start reconstruction today.

On the territory of 11 hectares, there are a total of 5500 sq.meters of 5 barns, accompanied by administration building, personnel house, concrete grain storage building, which can be used as a grain crushing premises (to prepare dry food for pigs), repairs building, open air concrete manure storages, emergency water storage. There is a water tank on the territory, there is a passport for a water well which is 69 meters deep, electricity plug-in is just 30 meters away. Location: Cherkassy region, 15 km from Kaniv, 65 km from Cherkassy, 135 km from Kiev. Currently, the farm is INACTIVE; all registration and necessary permits are there to quick start pig farming. Drafting project by PoltavaAgroProject Institute implies modern European technology of growing pigs with the best feed management practices and genetics. 
 500 hectares of farmland may be available near the farm. 
 In the village near the farm there are 800 people living; qualified veterinarian specialists are also available. 

 Therefore, even conservatively, the following indicators of swine complex after reaching full capacity (by 2014) are forecasted: 
Planned Output: 12 000 live pigs per year (it is UAH 26 mln in annual sales, i.e. USD 3.25 mln; with conservative 30-35% Ebitda margin, roughly USD 1 mln Ebitda can be achieved); Sows: 400-500 with good genetics. 
Planned Yearly Net profit - about UAH 7 mln (conservative net profitability 30%); (INVESTMENT into reconstruction and WC of USD 2 mln is REQUIRED i.e. UAH 16 mln ) . In 2.5-3 years the company will have a positive cash flow. Very conservatively IRR = 23% with discount rate of 25%. Positive NPV.
 - Potential valuation can grow up to UAH 50-75 mln i.e. USD 6.25 - 9.375 mln (according to conservative approach: P/E = 2-3). Potential return on investment may be 270-400% after 4-5 years. 
- Piglets per sow - at least 22-24 per year (conservatively) 
 - Daily piglet weight growth - on average 600-700 grams per day during feeding cycle. 
 - Targeted conversion ratio -  3.5-3.7 
 - Exit strategy: farm sale in 4-5 years; OR consolidate 2-3 similar swine farms, OR construct a biogas unit to fully utilize swine manure gas, generate electricity and get rebates under Kyoto protocol (project payback period = 3.5 years); OR become ORGANIC pig farm having a different strategy and more fat margins; OR start processing pork meat, OR produce high quality genetics sows. 

Customer Problem or Area of Opportunity

 There is a deficit of meat in Ukraine. Ukraine has to import 200 000 tones of meat per year in order to satisfy the demand. Capital investment would help to reconstruct our pig farm and satisfy the demand in meat. Prices remain high in the area due to the deficit and lack of meat. 

Describe Product or Service

 After reconstruction we will sell pig in live weight. Meat processing plants are ready to send their trucks to pick up live pigs. 

Market

 Our market is local. Kaniv town has 30 000 people living, but pig headcount totals only 5000 pigs. Therefore, prices in Kaniv are as high as in Kiev (capital of Ukraine).

Sales & Marketing Strategy

 Customers (meat processing plants and shops) are lined up already to buy some live pigs. We will concentrate on lean pigs, having high quality genetics (from Denmark) and good production qualities. So customers will have a choice not only to buy lean pigs, but also to buy high quality breed sows.

Management Team

 As a co owner I admit that we have built a good team of professionals: I have more than 15 years experience in agribanking (in major intl banks in Ukraine), my partner is a lawyer and legally all the docs are perfect, chief engineer has more than 40 years of experience, chief accountant is experienced in her field.

Business Model

 Efficient Production of live pigs aimed at constant improvement of efficiency ratios and KPIs: piglets per sow when born, live piglets after 1 month, daily weight gains, feed conversion ratio, low labor costs, profitablity is higher when the pig has less fat, producing high quality pigs will allow to increase margins by selling good quality genetics sows. 

Competitive Advantage

We plan to use modern technology equipment from Denmark in combination with some Ukrainian made equipment in order to get a better price and at the same time to obtain a good quality equipment. 
Local construction works will be done by Ukrainians, while modern equipment will be partially imported.
We plan to use Danish breeds as they proved to be efficient and applicable to Ukrainian conditions.
Modern technology bolstered by efficient mgmt will bring about an efficient result: better profitability, better manageability, stronger performance in the long term.
A lot of local people have already expressed their desire to work at the pig farm. Fortunately, there are really good people with good experience and professionalism. We have a potential to have a really good team. 

Barriers to Entry

Investment barrier is USD 2-3 million (at least). However, the deficit of pork meat will be filled within 10 years. We have some time to develop the business and exit it sucessfully.

Competitive Landscape

 Low competition, the meat processing plants have to look around and find small farms to supply them with meat, even though the supply is not stable. 

Competitors

Very Small and incompetitive farms with low investment capabilities, which do not allow to intensify the production of pigs. 

Next Steps

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