RDIF makes giant investment into TH Group’s Russian milk projects

TH Group completed the farm in Moscow. Source: thmilk.vn

The two sides signed the co-operation agreement at the St. Petersburg International Economic Forum (SPIEF) today (May 24). Established in 2011, RDIF is Russia’s sovereign wealth fund with a reserved capital of $10 billion under management. RDIF also attracted over $40 billion of foreign capital into the Russian economy through long-term strategic partnerships.

Theleader.vn quoted a Russian media agency as saying that this venture will develop TH Group’s two projects in Kaluga and Moscow.

In Russia, TH Group has deployed its first dairy project in Moscow and purchased 1,100 milk cows in last January. According to the group, there will be 45,000 cows on an area of 50,000ha with the total investment of $500 million. Milk output is expected at 234,000 tonnes per annum. Additionally, another dairy project in Kaluga is being developed.

Last year, TH Group announced plans of investing into a dairy cow and high-tech milk processing complex worth $2.7 billion in Russia. The project would be completed within ten years and would be divided into three phases in order to house 350,000 milk cows and a number of dairy factories with the total capacity of 1.8 million tonnes per year and total area of 140,000ha.

In Vietnam, TH operates the biggest cattle farm in Asia and the largest dairy production facility in Southeast Asia with the total investment of $1.2 billion in the central province of Nghe An. This group also intends to develop farms in other provinces, such as Ha Giang, Phu Yen, and Soc Trang, to reach the total scale of 137,000 milk cows in 2020.

Heavy investment in recent years has deteriorated TH Group’s business results in the milk segment. Theleader.vn said that these three TH's companies spent billions of dollars up to the end of 2016, while annual average revenue growth was at 20 per cent between 2014 and 2017.

Although the expansion is part of TH Group’s business plan, development targets in all segments including materials, milk cows, dairy factories, and distribution has set out big challenges in financial mobilisation.