31891 - Amerra Fund

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Summary of Investment Information

Project Number

31891

Company Name

AMERRA LATIN AMERICA FINANCE LLC

Date SPI Disclosed

Oct 31, 2012

Country

Latin America and the Caribbean Region

Region

Latin America and the Caribbean

Projected Board Date

Dec 4, 2012

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Nov 17, 2017

Department

Gbl Ind, Manufact, Agribus & Services

Industry

Agribusiness and Forestry

Previous Events

Approved : Dec 6, 2012
Signed : May 10, 2013
Invested : May 31, 2013

Sector

Other

Project Description

AMERRA Capital Management, LLC, (AMERRA) is an investment fund manager, focused on providing customized agriculture-focused and commodity-based finance solutions throughout the Americas to producers, processors, distributors and traders. AMERRA has about US$600 million in assets under management across five funds and accounts.

After successful deployment of investor capital through several funds during 2009-2012, AMERRA is in the process of raising additional equity for the AMERRA Agri Fund II, LP (AMERRA Fund II) which will provide a broader range of finance solutions to its existing and new clients, especially longer loan maturities than it has not been able to provide up until now. The proposed project entails IFC making about US$50 million of credit available to AMERRA Fund II for up to 5 years, leveraging the capital it will have to lend (the Project).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

Development Impact

Despite their contribution to food supply and rural livelihoods, smaller and medium-sized agribusiness companies (and the farmers that supply them) have historically had insufficient access to finance from private sector sources, in particular finance that extends for more than one crop season. Recently, the unfavorable supply-to-demand dynamics for financing to this segment has deteriorated as working capital needs have risen across the agribusiness supply chain with higher commodity prices at a time when the commercial banks who had been operating in some parts of the supply chain have come under increasing pressure to strengthen their capital ratios. The IFC project supports the expansion of an innovative firm whose business model includes providing financing into this segment by intermediating capital from an institutional investor segment in developed countries that has not historically invested significantly in these agribusiness segments from the emerging markets.

(A) IFC is helping Amerra design and implement an Environmental & Social Management System (ESMS) to identify and manage potential environmental and Social risks. The system will include the following. (i) an initial screening for every transaction, and an environmetnal and social (E&S) due-diligence for long-term finance transactions. (ii) When applicable, the preparation of a plan to mitigate E&S risks or strengthen client E&S practices. And (iii), monitoring and enforcement of the plan. Improved E&S evaluations systems are expected to make Amerra: (i) among the few finance firms in its and related financing niches with a formal ESMS, which in turn (ii) helps disseminate better E&S practices among its clients in the agricultural commodity supply chain.

(B) Agribusiness sectors generally do not enjoy good access to finance and financing that extends beyond a given crop year is especially limited for smaller and medium-sized companies. Through this project, IFC is supporting a financial intermediary serving the sector as it moves toward providing longer tenor finance to its clients (earlier up to about 3 years, now up to 5 years).

(C) Although Amerra is proving its business model works, its role in intermediating funding from institutional investors to medium-sized agribusiness companies in emerging market countries and companies that purchase commodities from emerging market countries has not tapped all the funding that such intermediaries could efficiently deploy given unmet finance needs of medium-sized agribusiness companies. IFC''s support for the Project represents an important diversification of funding sources and may have a demonstration effect to help catalyze the mobilization of funding from new sources for this financial intermediary and others in similar niches.

Indicator	Metrics	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - Water Consumption and Efficiency	Water Consumption Ratio (m3/#)	Not Available	Not Available	Not Available
CORE - Occupational Injury: Frequency (per million man-hours)	Injury Incidence Ratio (Injuries per million man hours) [Calculated]	Not Available	Not Available	Not Available
Farmers Reached (#)	Farmers Reached (#) [Actual]	Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The Fund’s proposed pipeline consists primarily of loans to agribusiness companies at a producer-, trader-, processor- and/or distributor-level, located in the Americas in countries such as Brazil, Mexico and others in Central and South America. Transactions range from short- to medium-term finance. While sub-projects in this sector and these countries could have potentially significant environmental and social risks, the Project will not invest in high-risk projects, therefore this project has been classified as Category FI-2.

The main risks associated with sub-projects in the region that involve primary production and/or processing, distribution or trading are related to labor and working conditions, resource efficiency and pollution prevention, land acquisition and/or resettlement, impacts upon biodiversity and possibly impacts upon indigenous peoples and cultural heritage. Some sub-projects involving food processing may have OHS risks, resource efficiency and pollution prevention and community health, safety and security risks; primary suppliers to processors, distributors and (depending on the proximity in the supply chain) traders may have risks associated with child and forced labor, OHS of workers and impacts upon biodiversity that would need to be addressed by the processors.

The above can be managed and/or mitigated by the Fund: (i) Developing an E&S Management System (ESMS) and capacity to review all sub-projects per the E&S laws and regulations of the sub-project''s country and the Performance Standards, to be in place by commitment; (ii) conducting E&S due diligence (ESDD), with the help of qualified professionals, to identify the applicable E&S risks of each sub-project and require corrective actions as needed to ensure that these risks are managed according to the Performance Standards and applicable laws; (iii) implementing a monitoring framework to supervise the E&S risks of all sub-projects and report to IFC. In addition, the Fund will not support any Category A projects and IFC will review the first three ESDDs prior to the Fund’s investment to support the implementation of the ESMS.

Contacts

For Inquiries About the Project, Contact

Mr. Pat Morabito
Chief Operating and Risk Officer
AMERRA Capital Management, LLC
1185 Avenue of the Americas, 18th Floor
New York, NY 10036
Telephone: 212- 710- 8022
mailto:pmorabito@AMERRAcapital.com

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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

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