37250 - AMERRA III

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Summary of Investment Information

Project Number

37250

Company Name

AMERRA LATIN AMERICA FINANCE ONSHORE, LLC

Date SPI Disclosed

May 22, 2017

Country

Latin America and the Caribbean Region

Region

Latin America and the Caribbean

Projected Board Date

Jun 30, 2017

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Oct 19, 2024

Department

Regional Industry MAS LAC & EUR

Industry

Agribusiness and Forestry

Previous Events

Approved : Dec 15, 2017
Signed : Mar 29, 2018
Invested : Jul 2, 2018

Sector

Other

Project Description

AMERRA Capital Management, LLC, (AMERRA) is an investment manager, focused on providing customized agriculture-focused and commodity-based finance solutions to producers, processors, distributors and traders, mainly in the Americas. AMERRA has over US$1.8 billion in assets under management across several funds and accounts managed for single institutional investors.

In 2012 and in 2014, IFC approved two medium-term loans to support an AMERRA-managed fund totaling US$60 million which has since been repaid as loans in the debt portfolio began maturing. IFC is currently considering providing two further loans totaling up to US$100 million to help AMERRA in support of its newly launched AMERRA Agri Fund III, L.P. (Onshore III) and AMERRA Agri Offshore Fund III, L.P. (Offshore III), increasing the capital they have to lend (the Project). The two funds will have similar portfolios and the distinction is that Onshore fund is open to most U.S. institutional investors whereas the Offshore Fund is available to non-US institutional investors and tax exempt U.S. investors.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	100.0
Equity

Development Impact

i) Contribution to food security: The Project will provides liquidity to the food supply chain, ensuring agribusiness companies (and the farmers linked to them) have the funding need to produce efficiently, contributing to food security. Many AMERRA clients are low cost producers of exported food commodities, contributing to making staple foods as inexpensive as possible. ii) Despite their contribution to food supply and rural livelihood, 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 unfavorable supply-to-demand dynamics for financing to this segment continues to deteriorate as commercial banks who had been operating in some parts of the supply chain continue to retreat from it to meet capital requirements. The Project supports the launch of the next generation of closed-end funds from a firm whose business model has successfully intermediated capital from institutional investors in North America that have not historically not invested significantly in these agribusiness segments in the emerging markets.

i) Stamp of Approval: Appetite of investors in developed countries to take credit exposure in emerging markets has not been consistently strong in recent times. IFC support for AMERRA through a period of fluctuating investor appetite is a useful expression of confidence in AMERRA's expertise in originating, structuring and servicing a specialized emerging markets loan portfolio in light of IFC's own experience of investing in emerging markets over sixty years, during which IFC has become the largest global development institution focused on the private sector in emerging markets. ii) Addressing financing gap in agribusiness: Agribusiness sectors do not enjoy good access to finance and financing that extends beyond a single growing season is especially limited for smaller and medium-sized companies. Through the Project, IFC is supporting a financier to the sector and bolstering its ability to provide rare, 4-year and longer tenors. iii) Improved E&S evaluation systems: AMERRA developed a formal Environmental & Social Management System (ESMS) after IFC started working with the firm in 2012 to provide a systematic means to screen for environmental and social risks. IFC will continue to support AMERRA as it strengthens the implementation of its ESMS, which has downstream benefits of also incentivizing and disseminating better E&S practices among its clients in the agricultural commodity supply chain.

E&S Category Rationale / Risks and Mitigation

The Project has been classified as Category FI-2 according to the IFC's Environmental and Social Review Procedure. The Company's portfolio involves short term (less than 365 days), medium term (365 days to 3 years) and long-term transactions (3-5 years). In mid-2016, AMERRA's greatest exposure was to soybeans (~23%), followed by sugar (~23%) and cocoa (~17%). In terms of country exposure, in the past it has been most active in Brazil (~30%), followed by USA (~18%) and Haiti (~14%). In general, the production of soybean products in the Cerrado region (Brazil) and sugarcane (Brazil) can have specific E&S impacts including biodiversity issues, deforestation, labor and land conflicts. Sub-sectors noted above, such as soy and sugar and also aquaculture (Ecuador), identified as potential long and medium term investments, will need additional E&S due diligence, and if such determines A categorization, will be precluded from investment. The key E&S risks of this project are associated with the capacity of AMERRA to implement the necessary Environmental and Social Management System (ESMS) to effectively assess and subsequently manage the E&S risk of financing its portfolio.

AMERRA focuses on providing customized agricultural finance solutions to agricultural commodity producers, processors, distributors and traders, mainly in South and Central America. As such the main risks are related to its ability to identify and manage the E&S risk as evident in the agricultural sector in Latin America. Risks may include: Child, Forced and Bonded Labor; Health and Occupational Safety Risks to Workers through agricultural practices and exposure to chemicals without proper protection gear; The use/storage of chemicals banned under the WHO risk classification; Significant Conversion of Natural and/or critical habitat, through deforestation and habitat conversion for agricultural purposes, habitat fragmentation and land use intensification; Unsustainable resource management practices and; Exposure to the Cerrado in Brazil with associated potential social and environmental impacts. Based on the analysis of the potential E&S risks, IFC's applicable requirements will be: (i) Implement AMERRA's ESMS by appointing a fulltime E&S Specialist and retaining specialized E&S capacity for risk identification and training purposes; (ii) Deploy resources to develop initial E&S risk screening tools and monitoring for all investments, regardless of timeframes; (iii) Develop medium and long term E&S tools, to include IFC Performance Standards; (iv) Consolidate monitoring and supervision of the ESAP (if relevant) or any other E&S matter within the credit or collateral monitoring process; (v) Develop an external communication mechanism in line with PS1; (vi) Not hold loans that would be classified as Category A Projects; (vii) Submit examples of ESMS implementation (ESDD templates, E&S screening tools, E&S risk management procedures such as product/country matrix etc.) together with an annual report to the IFC in a format to be provided by IFC.

Contacts

For Inquiries About the Project, Contact

Mr. Pat Morabito
Chief Operating and Risk Officer
AMERRA Capital Management, LLC
1185 Avenue of the Americas, 17th Floor
New York, NY 10036
Telephone: 212- 710- 8022
:mailto:pmorabito@AMERRAcapital.com

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Fax: 202-974-4384

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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Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

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Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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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.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Task Title & Description	Anticipated Completion Date
Nominate officers	07/07/2017
Formalize procedures	10/07/2017
Develop guidelines	10/07/2017
Staff Training	01/01/2018
Retain a specialised E&S Consultancy firm	08/07/2017
Develop an external communication mechanism	10/07/2017

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