Potato grower eyes expansion with Aim float

AN EASTERN European agricultural business headed by a Scottish farming entrepreneur and supported by the likes of Sir Malcolm Rifkind and the Salvesen family is to join the Alternative Investment Market as part of a major expansion move.

Continental Farmers Group was set up by Forfar farmer Mark Laird in 1994 with the backing of a number of Scottish and Irish investors and has built up farming interests across western Ukraine and northern Poland which offer relatively low costs and a favourable climate.

The company, thought to be worth around 40 million, is planning to join Aim this month although it is not yet known how much money it is planning to raise.

Rifkind, the former Edinburgh Conservative MP, is the company's senior independent non-executive director. Shareholders include Aim-quoted Irish-based agriculture group Origin Enterprises, which owns around 39 per cent of the company.

Laird, who is chief executive, owns 13.7 per cent and Alastair Salvesen, who has been involved with Scottish agriculture and seafood groups for many years, is thought to own around 4 per cent of the Isle of Man-registered company.

Continental Farmers produces crops including oil seed rape, sugar beet, potatoes, wheat and maize. It leases approximately 21,000 hectares of farmland in Ukraine and 1,100 hectares of land in Poland.

The company has plans in place to increase its leasehold land bank in Ukraine to over 50,000 hectares within five years.

Origin Enterprises bought a 20 per cent stake in Continental Farmers in 2008 for €12m. It later increased its stake to 39 per cent with its total investment currently standing at about €20m.

In a broker's note issued by NCB Stockbrokers on Origin Enterprises last week, it said it expected the company to "reduce its stake in Continental Farmers over time".

"In recent years the company has concentrated on bringing its land into full production and improving on-farm crop handling facilities," said the note.

"Continental Farmers now wishes to expand production and we expect that Origin's 39 per cent stake will be diluted over time as the company expands its scale."

Last November another Scottish agricultural company, Produce Investments, raised 15m to help fund a major expansion when it listed on Aim.

Produce, which supplies potatoes to the likes of Tesco and Sainsbury's, employs about 200 at its operations in Duns, Berwickshire and Perthshire. The company is better known by its Greenvale subsidiary name and grows, packs and also develops new potato varieties.

Produce also owns a Perthshire-based seed potato operation business, a 33 per cent stake in Organic Potato Growers (Scotland) which grows produce in Morayshire and Inverness-shire, and a similar-sized stake in a Czech-based potato company, BROP.Backers of the firm include Credential Produce, an investment vehicle of Glasgow-based property developer Barrie Clapham who heads Credential Holdings. Along with Airdrie-based Albert Bartlett it is one of the big three potato growers and packers in the UK.