41560 - Agricover SME

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Summary of Investment Information

Project Number

41560

Company Name

AGRICOVER CREDIT IFN SA

Date SPI Disclosed

Nov 5, 2018

Country

Romania

Region

Europe

Projected Board Date

Dec 7, 2018

Environmental Category

FI-2 - Limited

Status

Completed

Last Updated Date

Mar 14, 2024

Department

Regional Industry - FIG - ECA

Industry

Financial Markets

Previous Events

Approved : Jan 18, 2019
Signed : Feb 14, 2019
Invested : May 31, 2019

Sector

Other Non-Banking Financial Institution (NBFI)

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; (iii) short and medium-term financing; (iv) insurance brokerage; (v) fuel distribution; and (vi) trading of meat and livestock.

The proposed Project consists of a RON 40 million senior loan to IFN to support the Company’s long-term investment loans to small and medium enterprises (“SMEs”) that are primarily engaged in agribusiness activities in Romania, including small-scale climate related energy efficiency and renewable energy projects. The proposed investment will have a tenor of 5-year with 1-year grace period and will mark IFC’s third engagement with the Company.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	9.82
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Agri Finance (Corp./Farmers/Climate)
Straight Senior Loan	Climate (not covered in any category)

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

1. IFC anticipates that the proposed will (i) increase access to finance for agribusinesses (farmers-owned SMEs); and (ii) avail longer tenor investment loans for climate-smart equipment upgrades to increase energy and water efficiency targeting farming. The Project is a good opportunity to support organizing farming activity in Romania with renewed focus on improved standards and productivity.

2. IFC anticipates that the Project will promote adoption of a business model that allows reaching undeserved rural farmers and farmers-owned SMEs, including going down the market and serving smaller farmers through demonstration effect channel.

3. IFC anticipates that the Project will promote greater environmental sustainability through (i) development of the nascent climate smart agriculture finance market in Romania, (ii) promotion of the climate adaptation standards and increased resilience to face climate change, which will be brought about through demonstration effect and capacity building channels.

1. In 2012, IFC was the first international financial institution to provide financing to IFN, paving the way for investments from other multilateral development banks. IFC anticipates that the Project will facilitate a long-term partnership with a strategically important player in agrifinance by helping the Company refinance its fast-growing asset base;

2. IFN, as a non-deposit taking financial institution, needs external financing from local and international financial institutions to fund its robust asset growth. IFC anticipates that the Project will not only avail long-term financing to the Company which is not readily available in the market, but also by disbursing in local currency will reduce foreign exchange risk for the Company and its customers;

3. IFC will also play a direct role in providing expertise to the Company that is material to both (i) Company's institutional capacity building; and (ii) Project's development impact.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement		Not Available	Not Available	Not Available

E&S Category Rationale / Risks and Mitigation

The proposed project is a senior unsecured loan of up to 40 million Romanian Lei to Agricover Credit IFN SA to finance eligible SME agribusinesses in Romania, part of which being earmarked to finance small-scale climate smart projects in agriculture. IFC’s existing and previous investments with the Company also consisted of senior loans targeting agribusiness projects. Agricover’s portfolio includes SME financing where the highest exposure is to crop and animal 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 therefore been classified as FI-2 according to IFC Sustainability Policy. For this particular project, IFC's applicable E&S requirements will be to ensure that all eligible projects are screened against the IFC Exclusion List, and the applicable environmental and social national laws and regulations. In addition, Agricover Credit will comply with the requirements of IFC’s PS2 on Labor and Working conditions.

The key challenge in this investment will be for Agricover Credit to manage the E&S risks associated with the activities of its borrowers in line with IFC’s applicable E&S requirements. Agricover Credit has an Environmental and Social Management System (ESMS) in place and has designated staff members with overall responsibility for its implementation. The Company will enhance the ESMS to also assess climate smart projects and ensure staff has adequate capacity for its implementation. Based on available information, Agricover is generally in line with the requirements of IFC’s PS2 on Labor and Working conditions except for minor adjustments in their internal grievance mechanism.

Contacts

For Inquiries About the Project, Contact

Agricover Credit IFN SA
Robert Rekkers
General Manager

robert.rekkers@agricover.ro
Cubic Center Building, Bd. Pipera, nr 1B, etaj 6, Voluntari, Iflov, Romania
www.agricover.ro/finantare

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Task Title & Description	Anticipated Completion Date
Enhance ESMS	01/13/2019
Implement ESMS and Provide Due Diligence and Monitoring Reports to IFC	04/13/2019
Staff Training Plan	12/10/2018
Staff Training	03/14/2019
Enhance HR Practices in Line with IFC’s PS2 on Labor and Working Conditions	03/14/2019

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