Graham Stack in Kyiv -

UkrLandFarming has signed a memorandum of cooperation with China's CAMC Engineering Co. for up to $4bn in investment to boost production of meat, sugar and agricultural machinery in Ukraine, Chinese media reported on April 9. The deal will be the largest ever investment in Ukraine's agriculture sector, should it go through.

The current plan will see CAMC, a subsidiary of machinery giant Sinomach, pump the huge investment into new grain storage facilities, pork and poultry production, a sugar refinery upgrade, and a joint venture for assembly of agricultural machinery. Financial support will come from China's state-owned Export-Import Bank of China, which plays a leading role in Beijing's drive to increase Chinese activity across the globe via massive volumes of cheap funding for the country's companies, as well as foreign governments.

UkrLandFarming, which is controlled by oligarch Oleg Bakhtmatyuk, wants Sinomach as a strategic partner in its upgrade plans, reports Kommersant-Ukraine, but doesn't plan to sell a the Chinese a stake in the company itself. News of the deal was circulated by Chinese media on April 9, but there has been no official confirmation from Bakhmatyuk's structures yet.

Rumours of large Chinese investment in Ukraine's promising agricultural sector have been doing the rounds for months, and the deal if it comes to fruition would be the largest ever foreign investment in Ukrainian agriculture.

Bakhmatyuk is one of a clutch of Ukrainian oligarchs who made their fortune in gas trading - he was deputy head of Ukraine's state gas company Naftogaz as a thirty year old - but he quickly saw that agriculture offered more upside than the lucrative but dodgy schemes prevalent in the country's murky gas sector.

Therefore, he put his cash pile to work to buy up agro companies throughout Ukraine, cornering the egg market in the process through Avangard, which carried out a successful IPO in London in 2010. Bakhmatyuk appeared to have similar plans for grain producer Ukrlandfarming but transferred his stake in Avangard in late 2011 to merge the two companies instead.

"Large Chinese structures are particularly interested in our agriculture sector, including the construction of new elevator capacities and also production of agriculture technology," Chinese media quoted Bakhmatyuk as saying.

Analysts at Art Capital suggest the potential deal illustrates the oligarch's grand ambition and vision as he looks to leverage his companies' role in the growing global agriculture story. "In effect,: they write in a note, "the contract signed shows that he (Bakhmatyuk) thinks and runs his business in a way that surpasses the scope of his companies and includes the whole of Ukraine and its role in the global food supply. We believe this catalyst to have so far been overlooked by the market but that it is soon to become a major driver behind the Avangard stock."