39197 - WCSS Agricover

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Summary of Investment Information

Project Number

39197

Company Name

AGRICOVER CREDIT IFN SA

Date SPI Disclosed

Feb 23, 2017

Country

Romania

Region

Europe

Projected Board Date

Mar 30, 2017

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry - FIG - ECA

Industry

Financial Markets

Previous Events

Approved : May 4, 2017
Signed : May 18, 2017
Invested : Jun 6, 2017

Sector

Finance Companies

Project Description

Agricover Credit IFN S.A. ("IFN" or the "Company") is the only Romanian financial institution specialized in financing the agricultural sector. The Company is part of the Agricover Group (“AG” or the “Group”), an integrated agricultural group and one of the largest agri traders in the country whose main operations include: (i) grain sourcing, trading and logistics services; (ii) distribution of agricultural inputs to farmers; (iii) provision of financing to farmers; (iv) fuel distribution to agriculture; and (v) trading of meat and livestock.

As the financing arm of AG, IFN offers both short term working capital financing and medium term investment loans to farmers active in the vegetal sector, animal breeding, milk production, and processing industry, among others.

The proposed project consists of an investment of up to RON70mn in the form of a 1-year, senior loan under IFC’s Working Capital Solutions (“WCS”) product to IFN to support the agriculture sector in Romania. The WCS loan is renewable up to two times at IFC’s option for two additional 1-year periods, for a maximum aggregate facility life of up to 3-years. The WCS loan will be disbursed in local currency to support the Company’s short term loans to small and medium enterprise (“SME”) farmers.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	16.88
Equity

Development Impact

Specific positive developmental impacts are expected to be:
1. By directly financing the short-term needs of the Company to support the agribusiness sector, small and medium-sized farmers whom IFC cannot finance directly will have increased access to financing and, therefore, a positive impact on economic activity in Romania's agricultural regions.
2. By supporting IFN's portfolio expansion directed at SME farmers, IFC will aim to strengthen the value chain and increase capacity by allowing producers and processors to extend or have several production cycles through additional working capital. This will enable a better competitive position for the SME farmers in the local and regional markets.

IFC's additionality in this project includes:
1. In 2012 IFC was the first IFI to provide financing to the Company and has paved the way for other IFIs. Through the present project, IFC is continuing its long standing partnership with the Company. IFC's financing will support the growth of IFN's client base, which is expected to double by 2020.
2. As part of its development mandate, IFC is well-positioned to support local financial institutions in financing short-term, working capital needs in strategically-important sectors such as agribusiness.
3. IFC would help the Company raise funding and on-lend in local currency, therefore reducing foreign exchange risk for itself and its clients. Through the WCS product, IFC will enable the Company to prudently manage its assets and liabilities, while further diversifying its funding sources.

E&S Category Rationale / Risks and Mitigation

The proposed project consists of a senior loan of up to RON70 mn to Agricover Credit IFN for financing of short term loans to small and medium enterprise ('SME') farmers in the country. The highest exposure in the Company's eligible portfolio is to crop production with potential limited adverse environmental or social risks or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures. The project has been classified as FI-2 according to IFC Environmental and Social Review Procedure. For this particular project, IFC's applicable requirements will be to ensure that all projects that fall under the asset class are screened against the IFC Exclusion List, and the applicable environmental and social national laws and regulations. In addition IFN will continue complying with the requirements of IFC's PS2 on Labor and Working conditions.

The key challenge in this investment will be to ensure that the E&S risks associated with the activities of IFN's borrowers are managed in line with IFC's policy requirements, including compliance with the IFC's Exclusion List, and Host Country Laws and Regulations. During the previous IFC loan investment, IFN has established an Environmental and Social Management System (ESMS) in line with IFC requirements applicable to the majority of the portfolio, and nominated staff for its implementation. The ESMS will need to be revised in line with the requirements of this project. IFN is generally in compliance with IFC's PS2 on Labor and Working conditions.

Contacts

For Inquiries About the Project, Contact

Company	Agricover Credit IFN S.A.
Point of Contact	Robert Rekkers
Title	General Manager
Telephone Number
Email	Robert.Rekkers@agricover.ro
Mailing Address	Cubic Center Building, Bd. Pipera, nr. 1B, etaj 6, Voluntari, Ilfov, Romania
Website	http://agricover.ro/finantare/

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Task Title & Description	Anticipated Completion Date
Staff Training	08/26/2017
Enhance ESMS	04/28/2017
Implement ESMS and provide IFC with an ESMS implementation report	07/27/2017

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