Buenos Aires, July 24, 2020 — IFC, a member of the World Bank Group, is providing a US$100 million loan to support the expansion plan in the dairy sector of Adecoagro, a leading agribusiness company in Argentina. This investment will help foster an innovative, sustainable approach to developing the dairy industry, an important component of the agribusiness sector in Argentina, which is a key economic driver for the country, accounting for 63 percent of its total exports.
Adecoagro is a leading producer of food and renewable energy with operations in Argentina, Brazil, and Uruguay. IFC’s investment will support Adeco Agropecuaria, Pilaga and L3N, three Argentine subsidiaries of Adecoagro.
The US$100 million financing package consists of a US$57.25 million loan on IFC’s own account, including a US$17.8 million IFC Green Loan* tranche that will fund wastewater treatment and climate-friendly projects, representing the first IFC Green Loan in the real sector in Argentina and the first IFC Green Loan in the dairy and animal protein sector globally. The remaining US$42.75 million will be loaned through the IFC Managed Co-Lending Portfolio Program (MCPP), a platform that allows institutional investors the opportunity to passively participate in IFC’s future loan portfolio. The tenor for both tranches is eight years, including a two-year grace period.
IFC’s loan will support Adecoagro’s investment program in the dairy sector in Argentina, which has a comparative advantage, with some of the lowest production costs globally, and potential to grow. It will provide long-term financing for the acquisition and efficiency improvement of two dairy processing facilities and the construction of two dairy free-stalls to expand milk production, an innovation for the local market which is expected to increase resource efficiency, productivity and improve animal welfare.
At the same time, the loan will also foster efficiency and finance climate-related activities such as establishing an anaerobic bio-digester to produce renewable energy from animal waste that will be sold to the grid, and financing the revamping of the two dairy processing facilities. The positive environmental impacts of the Green Loan activities will help reduce greenhouse-gas emissions and cut energy and water consumption. IFC will also provide technical advice to Adecoagro on improving resource efficiency in their operations.
“Through this investment, IFC will contribute to strengthen the competitiveness of Argentina’s dairy sector by providing access to long-term financing to Adecoagro at a time when funding options are limited,” said David Tinel, IFC Country Manager for Argentina, Chile, Paraguay and Uruguay . “This highlights IFC’s continued commitment to provide counter-cyclical support to its clients and help accelerate the country’s recovery from the economic impacts of the pandemic.”
“The IFC Green Loan confirms Adecoagro’s commitment to sustainable agribusiness production under world-class standards, and will allow it to expand its production sustainably at a time of global uncertainty,” said Alejandro López Moriena, Adecoagro’s Chief Sustainability Officer. “The program will also support rural livelihoods by preserving and creating quality jobs at a crucial time.”
IFC’s strategy in Argentina focuses on financing projects with significant development impact that spur economic growth, innovation and job creation. Priority sectors include agribusiness, infrastructure, energy, and financial intermediaries to reach SMEs. Through its advisory programs, IFC works with governments and companies to help establish the conditions that will attract the most private capital, enabling the private sector to grow and create jobs. For more information about IFC in Latin America and the Caribbean, visit www.ifc.org/lac .
* A Green Loan is a loan that is aligned with the Green Loan Principles of the Loan Market Association.
About IFC
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2019, we invested more than $19 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org .
About Adecoagro
Adecoagro was founded in 2002 by a group of Argentine and international agricultural entrepreneurs. The company is a leading agribusiness producer of food and renewable energy with operations in Argentina, Brazil, and Uruguay. In Argentina, Adecoagro produces corn, wheat, sunflower, peanuts, soybean, rice and raw milk, and more recently processes dairy products. For more information, visit www.adecoagro.com .
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