MHV was founded by Daniel Spitzer and his wife, Teresa Law, together with other senior members of the management team. Daniel Spitzer serves as the Chairman & CEO with 21 years of experience in building and operating companies in Asia, including Plantation Timber Products Group (PTP), a previous IFC investment. Prior to that he spent 10 years in finance, including as a Partner at General Atlantic, a Private Equity fund.

MHV is a private limited company based in Bhutan, and it is the country’s first 100% foreign direct investment. Incorporated in July 2010, MHV is a 100% subsidiary of Mountain Hazelnut Venture Limited, a Hong Kong company owned 100% by holding company Mountain Hazelnut Group Limited (MHG), a BVI-domiciled entity. MHG is 70.3% owned by MH Founders, an investment vehicle of the company’s founders and senior management. A number of impact investors holds the remaining 29.7%.

The total project cost is US$15.0 million, covering additional investments in nursery operations, planting and tree distribution, farmer training and monitoring, organizational costs and working capital, capex for a processing facility, collection centers and vehicles, other expenses and contingency.

IFC aims to invest up to US$3.0 million in MHG together with the Private Sector Window of the Global Agriculture and Food Security Program (“GAFSP”) which plans to invest up to US$6.0 million. The remaining US$6.0 million is expected to come from the Asian Development Bank (up to US$3.0 million) and the Sponsors and existing shareholders (up to US$3.0 million).

Refer to other sections for details.

3.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	3.0

* These investment figures are indicative

The project is being implemented all across Bhutan, with MHV’s operational headquarters and the main nursery located in Lingmethang in Mongar district. Hazelnuts are being grown in a total of 16 ‘Dzongkhags’ (sub-districts) from eastern and central regions of Bhutan (viz. Trashigang, Trashiyangtse, Mongar, Lhuentse, Pemagatshel, Samdrup Jongkhar, Zhemgang, Bumthang, Trongsa, Wangdue, Punakha, Gasa, Dagana, Tsirang and Chhukha). The processing facility will be set up near Lingmethang in Eastern Bhutan. In addition, MHV operates a small office in Thimphu.

(i) Linking farmers to markets: Involved farmers will get market access and be integrated into an international supply chain to enhance commercial agriculture production;
(ii) Farmer reach and increased income: Project is expected to involve 15,000 farmer households, affecting up to 20% of Bhutan''s population of around 750,000; Farmers receive training to grow hazelnuts and generate incremental income on degraded land which would otherwise be left barren;
(iii) Job creation and women participation: MHV has directly employed nearly 500 Bhutanese so far, and plans to double this in the coming years, including women employment at all levels. In addition, linkages with over 1,200 service providers will be expanded;
(iv) GHG mitigation and forest preservation: Hazelnut trees will offset significant amounts of CO2 through carbon fixation over the course of their lifetime, as well as contribute to soil retention and regeneration. The cultivation of hazelnuts will also discourage deforestation, as annual pruning will serve as an alternative source of fuel wood;
(v) Food safety and traceability: MHV is implementing a comprehensive traceability system using a combination of frequent extension visits by trained staff who use android-based Remote Monitoring & Traceability tools to provide real time information and to ensure consistent high product quality levels from farm to customer;
(vi) Improved ICT (Information and Communication Technology): The project will provide farmers with market information and improve ICT based knowledge management and information exchange systems at the field level;
(vii) Reduce urban migration: Project areas are predominantly in the Eastern and Central regions of Bhutan; the attractive returns for farmers will help reduce / slow down urban migration towards the capital Thimphu in the West, where employment opportunities are limited.

(i) Substantial long-term funding package: The required long-term funding amount is not available in the market. The IFC structured package mobilizes substantial funding from ADB and GAFSP;
(ii) Resource Mobilization: IFC''s investment, together with ADB, is expected to enable MHV to more easily raise capital from other investors at a later stage if needed;
(iii) Stamp of Approval: IFC''s endorsement lends the project credibility given IFC''s experience in global agribusiness, as well as corporate governance and E&S standards, especially in the areas of food safety and traceability. This is particularly important for building commercial relationships with project offtakers as well as for exit considerations;
(iv) Corporate Governance and E&S: IFC will support the Company in strengthening E&S and Corporate Governance as the business ramps up towards commercial operation. IFC support is key in preparing the Company for an exit in the future;
(v) Demonstration effect: IFC''s engagement would raise confidence in the agricultural / real sector in Bhutan as an FDI destination, which will attract other international lenders/investors;
(vi) Political Risk Mitigation: The Sponsor views IFC and ADB as invaluable partners by his side to maintain good relations with the government and ongoing support.

This is a category B project according to IFC''s environmental and social review procedures.



Key E&S risks and issues related to this project include: social and environmental assessment of the risks and impacts of the project; the Company’s capacity, corporate systems and practices to manage its social and EHS performance, and engage with local communities and other stakeholders in accordance with local requirements, IFC Performance Standards and applicable World Bank Group’s EHS Guidelines; assurance of fair, safe and healthy working conditions; resource efficiency practices to maximize conservation of energy and water; management of emissions and wastes from its proposed processing facility; and impacts of transport infrastructure.



Further details on the potential environmental and social impacts of the project, corresponding mitigation measures and guidance on how and where information about the project are provided in the IFC Environmental & Social Review Summary.

Please refer to the related Environmental and Social Review Summary (ESRS) document for this project.

Please refer to the Environmental and Social Action Plan (ESAP) tab in the related Environmental and Social Review Summary (ESRS) document for this project.