Vittia aims for 1st place in a sector of strong expansion in agribusiness with an IPO on hold

O Vittia Group, a Brazilian biotechnology and special plant nutrition company, works to take the lead in biochemicals, the fastest growing segment in inputs agricultural of the country, while maintaining initial share offering plans (IPO) in the “refrigerator”, waiting for a greater maturity of the market to agribusiness companies.

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After the inauguration at the end of last year of the largest factory in Latin America for biological products, products that collaborate to increase agricultural productivity and still have sustainability appeal, the company is now preparing to dispute the leadership in the country with the Dutch company Koppert.

With an installed production capacity of 5 million liters/kilograms per year, the new Vittia unit in São Joaquim da Barra (SP) has revenue potential in excess of 500 million reais a year, the group’s financial director, Alexandre, told Reuters Del Nero Frizzo.

“We believe that revenues will jump in 2021 (with the new unit)”, he highlighted, noting that the company intends to “be a leader” in this market with the support of the new factory.

The company with half a century of operation in Brazil — and four major acquisitions since the entry of a fund in the family business in 2014 — registered a 69% jump in net revenue in the first quarter, to 119.5 million reais, after closing 2020 with sales of around 580 million reais.

But he commented that the new unit in the Ribeirão Preto region, which has, among others, liquid fermentation technologies for fungi and bacteria, will chase after a market for biological defensives that grew 40% in 2020.

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Still small next to the chemical defensive market, the category of products that fight pests in crops with fungi, bacteria, viruses and insects is expected to grow 33% in 2021 in the country, to 1.79 billion reais, according to a survey released by the CropLife association, which considers these biologicals as the fastest growing segment among agricultural inputs.

According to the Vittia executive, the company grew 50% in the biological line in 2020, an advance that could have been even greater, if the company already had greater capacity. “This year, with the entry of the new plant, the bottleneck was eliminated.”

Even though it is a “revolutionary” technology with strong growth, biologicals represent a smaller share of the pesticides market, dominated by chemicals, whose sales in the country total about 50 billion reais a year.

IPO PLANS

In the first quarter, the group with production units also in the São Paulo cities of Ituverava, Serrana, Artur Nogueira, in addition to the cities of Uberaba and Patos de Minas, more than doubled the cash generation measured by Ebitda.

The company was boosted by sales of biological products, but also of other products, such as inoculants (biological fertilizers), which are already the leader in Brazil.

Special fertilizers, such as bacteria-based products that biologically fix nitrogen in the root, accounted for more than 50% of the company’s 2020 sales, which filed for an initial public offering (IPO) last year but held back. operation due to market conditions.

The company, whose 70% stake is owned by the Romanini family, assesses the market was not yet ready to receive a wave of IPOs from agribusiness companies as seen last year — many of which have suspended transactions.

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Although agribusiness is an important engine of the Brazilian economy, investors and houses that deal with IPOs still do not have the same knowledge of the agricultural industry that they have about other sectors with greater participation in the stock market.

“In technology or e-commerce companies, the guy already has a whole foundation… he already understands, he already knows how to price… basically this is the challenge (as an agribusiness company), when he arrives with new assets, this it’s starting to put a lot of pressure on appetite, the size of the order,” explained the executive, citing that more than ten agribusiness companies filed for an IPO, but most of them were unable to conclude.

In the case of Vittia, said Frizzo, the project is in “standby mode, in the refrigerator”, but the company is prepared for when conditions favor, to relaunch the operation.

Vittia’s IPO would allow, in addition to the company’s capitalization for new acquisitions, the “exit” of the private equity fund Brasil Sustentabilidade FIP, which in 2014 started to hold a minority stake in the family group.

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