35170 - AMERRA Latin America Finance LLP

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Summary of Investment Information

Project Number

35170

Company Name

AMERRA LATIN AMERICA FINANCE LLC

Date SPI Disclosed

May 15, 2014

Country

Latin America and the Caribbean Region

Region

Latin America and the Caribbean

Projected Board Date

Jun 16, 2014

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Feb 26, 2017

Department

Gbl Ind, Manufact, Agribus & Services

Industry

Agribusiness and Forestry

Previous Events

Approved : Jun 26, 2014
Signed : Aug 12, 2014
Invested : Aug 26, 2014

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 to producers, processors, distributors and traders, mainly in the Americas. AMERRA has about US$800 million in assets under management across several funds and accounts managed for single institutional investors.IFC approved a US$ 50 million loan to support AMERRA in 2012, which has since then has been fully deployed in AMERRA’s operations. IFC is currently considering providing a new loan of about US$ 10 million to help AMERRA extend its reach to new clients and to countries where it has historically not been as active. In 2013, AMERRA started making additions to its team which is supporting an increase in its lending operations in Paraguay and Uruguay. Between 2009-2014, AMERRA has been deploying capital raised largely from US institutional investors with a small but focused team led by its principals, who have decades of commodity finance experience. AMERRA has proven a good complement to the banking sector in terms of providing finance solutions to clients in the agribusiness value chain where assessment of lending risks is specialized and where client needs often require shorter response times than banks are able to provide. The proposed project entails IFC extending about US$ 10 million as a medium-term loan to help fund a part of the portfolio of AMERRA Agri Fund II, L.P. (“Agri Fund II”), increasing the capital it will have to lend (the “Project”).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	10.0
Equity

Development Impact

The Project will support liquidity in the food supply chain and help ensure agribusiness companies (and the farmers linked to them) can continue to maximize production in scenarios of high commodity prices, which would make a contribution to food security. Many AMERRA clients are low cost producers of food staples.

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. The supply-to-demand dynamics for financing of the agricultural sector continue to show insufficient supply from the established financial sector and commercial banks that had been financing some parts of the supply chain but continue to be under pressure to strengthen their capital ratios, which limits their activity in the sector.

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.

IFC is helping AMERRA implement and refine an Environmental & Social Management System (ESMS) to identify and manage potential environmental and social risks. The system will include the following. (i) Initial screening for every transaction, and an environmental 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 make AMERRA among the few finance firms in its and related financing niches with a formal ESMS, which in turn disseminate better E&S practices among its clients in the agricultural commodity supply chain.

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. By providing a medium-term loan, IFC is enabling a financial intermediary that serves the sector to sustainably provide longer tenor finance to its clients (more than half of AMERRA''s portfolio has a tenor greater than 1 year).

IFC''s support for the Project represents an important diversification of funding sources for AMERRA and may have a demonstration effect to help catalyze the mobilization of additional debt from new sources for this financial intermediary and others in similar niches.

E&S Category Rationale / Risks and Mitigation

The proposed portfolio and pipeline consists primarily of investments in agribusiness sub-projects at a producer, trader, processor and/or distributor level, located in the Americas in such countries 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 sub-projects, therefore this project has been classified as Category FI-2.

Under the existing project (#31891), AMERRA has developed and implemented an Environmental & Social Management System (“ESMS”). As part of this investment the Project will be required to enhance its ESMS to better identify the E&S risks of its borrowers and to better integrate E&S considerations during decision-making and sub-project approval.

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 food safety and Occupational Health and Safety (“OHS”) risks, resource efficiency and pollution prevention (wastewater treatment plant) 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 supply chain related issues, including 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 Project as follows. (i) Enhancing its existing E&S Management System and technical capacity to review all sub-projects in accordance with national E&S laws and regulations of the sub-project''s country, the Performance Standards and the World Bank Group''s general and sector-specific EHS Guidelines, to be in place by first disbursement. (ii) Identifying, with guidance from IFC, a qualified E&S professional to aid in the analysis of potential E&S risks of prospective clients as well as perform diligence on existing sub-projects. The overall scope of this role will evolve alongside the E&S Management system to ensure that these risks and impacts are managed according to the national applicable laws and regulations and IFC Performance Standards. (iii) Implementing a monitoring framework to supervise the effective implementation of Corrective Action Plans required to address E&S risks and impacts of all sub-projects and report implementation progress status to IFC. In addition, the Fund will not support any Category A projects, due to significant E&S risks and impacts and/or inherent sector risks, and IFC will review three ESDDs prior to the Project’s investment in the relevant sub-projects to confirm the effective implementation of the Fund''s ESMS.

Contacts

For Inquiries About the Project, Contact

Mr. Pat MorabitoChief Operating and Risk OfficerAMERRA Capital Management, LLC1185 Avenue of the Americas, 17th Floor New York, NY 10036Telephone: 212- 710- 8022mailto: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.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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Task Description	Anticipated Completion Date
Enhance the implementation of the existing ESMS by strengthening the risk assessment process and the definition of Corrective Action Plans prepared during the sub-project approval process	Prior to first disbursement

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