Viktor Nauruzov’s junk collection: GAP Resource takes on billions in debt from the over-leveraged Shuvalovo

The company now faces a shortage of chicken meat. GAP “Resurs” (brand “Blagoyar”), the leader in broiler meat production, is strengthening its positions in other segments.

The group may acquire the enterprises of the Kostroma-based company “Shuvalovo,” which produce 10,000 tons of pork and 2,500 tons of sausage products per year. Demand for sausages is growing, and analysts see potential for market consolidation.

The structure of GAP “Resurs” has received preliminary approval from the Federal Antimonopoly Service (FAS) to acquire the Shuvalovo group, which specializes in pork production and processing and includes a facility for sausages and semi-finished products, a dairy farm, and a feed mill in the Kostroma region.

According to a market source cited by Kommersant, Shuvalovo’s enterprises can produce about 10,000 tons of live-weight pork, 2,500 tons of sausage products, and 10,000 tons of milk annually. The land bank, according to the source, reaches 3,000 hectares.

In the 2022 report of JSC “Shuvalovo,” the owners are listed as Vladimir and Ninel Komin. GAP “Resurs” is likely preparing to begin managing the assets. In February, a vacancy for a human resources management specialist with a location in Shuvalovo, Kostroma region, appeared on GAP “Resurs”’s HeadHunter profile. GAP “Resurs” declined to comment, and Shuvalovo did not respond to Kommersant.

In 2023, Viktor Nauruzov’s GAP “Resurs” held first place in broiler meat production, producing 1.04 million tons live weight, according to the National Poultry Union. It also produces lamb, sausages, and other meat products, vegetable oils, and dairy products. Its brand portfolio includes Blagoyar, Dym Dymyč, Rossiyanka, and others.

A source cited by Kommersant estimated the potential value of Shuvalovo’s business at 500 million rubles, based on the group’s EBITDA of 150–200 million rubles over the past three years, net debt of 1–1.2 billion rubles, and a book value of fixed assets of 1.6 billion rubles.

Yury Kovalev, CEO of the National Union of Pig Breeders, notes that Shuvalovo demonstrates good productivity results. In 2022, an outbreak of African swine fever was recorded at one of Shuvalovo’s facilities, according to reports. Kovalev explains that in modern complexes, production at such sites can be restored after certain procedures.

Shuvalovo could become GAP “Resurs”’s first asset in pig farming. In 2022, sources told Kommersant that GAP “Resurs” was close to acquiring assets of the pork producer GK “KoPitania.” That summer, the FAS allowed GAP “Resurs” to acquire part of KoPitania’s assets. However, according to a source, the deal has not yet taken place. KoPitania declined to comment.

In 2022, 2.4 million tons of sausage products were consumed in Russia, according to the Agroexport report.

Albert Davleev, President of Agrifood Strategies, notes that GAP “Resurs” is seeking to diversify its product portfolio and develop deep meat processing, for which it is considering acquiring pig farming enterprises. These enterprises also have synergies with poultry complexes through mutual exchange of feed resources, he points out. Alexey Kletzko, director of Yakov & Partners, notes that the deal with Shuvalovo aligns with GAP “Resurs”’s strategy of acquiring local meat processors and could help develop expertise in pig farming.

According to Davleev, meat producers in the near future may focus primarily on the domestic market due to export difficulties related to payments and logistics. According to NielsenIQ, meat and sausage sales in 2023 exceeded 2021 levels in absolute terms, and demand in both categories is growing at double-digit rates. However, a market source notes that GAP “Resurs” may also plan to expand exports, particularly to Southeast Asian countries.

Rosselkhozbank, in its M&A research in the agricultural sector, classifies meat processing as an industry with low consolidation, where the ten largest players hold 20% of the market, forecasting new deals for asset acquisitions by pig and poultry producers.