* Shares up 9.1 percent at $12 after IPO priced at $11
* Expected price range cut to $11-$12 from $13-$15
* Sells 28.6 million shares, raises $314.3 mln
* Soros fund is main Adecoagro shareholder
(Updates with details of market conditions, company
financials, share price; adds analyst comment, byline)
By Alina Selyukh
NEW YORK, Jan 28 The shares of Adecoagro SA
(AGRO.N), a Luxembourg-based agricultural company backed by
billionaire investor George Soros, rose 9.1 percent in their
stock market debut on Friday.
The shares rose to $12 on the New York Stock Exchange on an
overall day of declines, as Adecoagro became a new addition to
a hot -- but relatively sparse -- list of agriculture sector
Adecoagro, one of the largest farmland owners in South
America, has 38 farms in Argentina, Brazil and Uruguay spanning
almost 288,000 acres. It runs rice facilities and dairy
operations in Argentina and has two coffee processing plants
and two sugar and ethanol mills in Brazil.
With world food inflation on the rise, investors have been
clamoring for all things farm-related, especially in heavily
agriculture-driven countries such as Argentina.
The shares of Adecoagro's closest analog publicly traded in
the United States -- Argentina-based farm operator Cresud
(CRESY.O) -- have advanced almost 70 percent in the past eight
months on the New York Stock Exchange.
"It has been the only play in the U.S." for equity
investors looking to cash in on the booming Latin American
agriculture business, said Pedro Herrera, senior vice president
of HSBC Global Research, who covers Latin American food,
agribusiness and biofuels.
"There are difficulties for investors to play the
agriculture sector. There are only a few plays," he said.
In recent years, Adecoagro has also delved into renewable
energy, while more than doubling its corn, sugar and ethanol
sales in the first nine months of 2010 compared with the same
period in 2009, the filing showed. The company now plans to use
the proceeds to build a third sugar and ethanol mill in Brazil
and buy more farmland.
At the same time, the ethanol expansion has taken its toll
on Adecoagro's bottom line, causing the company to record
operating losses. The firm reported negative net cash flow of
$80.9 million in September 2009 and negative net cash flow of
$27.1 million in September 2010.
The company said it acquired a significant amount of land
in Bahia, Brazil. The western part of the state has become
something of an agricultural frontier in the last decade, with
vast flat plains that lend themselves to mechanization,
attracting investment in industrial-scale, lower-cost farming.
"The Latin American platform, particularly Brazil, is one
of the only places where you can efficiently increase
production," said Herrera, who follows Cresud.
Following the IPO, Adecoagro plans to sell shares worth
about $78.6 million to Al Gharrafa Investment Co, a wholly
owned subsidiary of Qatar Holding LLC, an investment vehicle of
the Gulf state's government. The deal would increase Al
Gharrafa's stake in the company to 11 percent from 6 percent.
At the same time, Pampas Humedas LLC, an affiliate of Soros
Fund Management and Adecoagro's largest shareholder, will
reduce its stake to 23 percent from 33 percent.
Pampas, as well as several other Adecoagro's principal
shareholders, had planned to sell some shares in the IPO, but
scrapped that idea.
A spokesman for Soros, who also owns a 1.2 percent stake in
U.S. seed producer Monsanto Co (MON.N), declined to comment on
The company said on Friday it sold 28.6 million shares at
$11 each, raising $314.3 million.
In a regulatory filing on Thursday, Adecoagro cut the price
range to $11-$12 from $13-$15 as its existing shareholders also
reduced the number of stock they planned to sell to only
165,503 shares instead of the originally expected 7.1 million.
Credit Suisse, in which Qatar Investment Authority also
owns a 6 percent stake, led underwriters on the offering. Other
underwriters included Morgan Stanley and Itau BBA.
The details of Adecoagro's IPO pricing were originally
expected to be released on Thursday after the U.S. market
(Additional reporting by Peter Murphy in Brasilia; editing by
Phil Berlowitz, John Wallace and Andre Grenon)