Finance for agribusiness in Latin America
Finance for agribusiness in Latin America
10/06/2009
Finnfund has granted an 8 million dollar loan to LAAD Americas, a company that finances small and medium-sized agricultural enterprises in Latin America and the Caribbean. LAAD is Finnfund’s first customer to focus exclusively on agriculture.
LAAD Americas N.V. finances agricultural SMEs by granting them secured, dollar-denominated loans for start-up costs, expansion investments and working capital. The average loan size is 400 000 dollars, with a tenure usually of 3-7 years.
The main target countries include Ecuador, Brazil, the Dominican Republic and Chile. Most of the finance is granted for market gardening and the rest for farming. Bananas, soy, flowers, grapefruit, coffee and avocados are typical products. In addition a small proportion of LAAD loans have been granted for fishing and livestock production.
Well informed about its local customers
LAAD has nine regional offices in its main target countries and a staff of about 50. Its management is highly experienced in banking as well as agribusiness; its operations are based on continuous contact with customers and a deep understanding of their activities.
The company does not grant finance in local currencies and therefore does not directly compete with local banks. Because LAAD finance is targeted towards exporters, whose earnings are mostly in dollars, the dollar denomination of its loans does not constitute an exchange rate risk.
LAAD is Finnfund’s first customer to concentrate on agriculture. Agribusinesses generally have poor access to long-term financing, especially in the current turbulent state of the financial markets. Finnfund’s loan will therefore serve to support the smooth continuation on operations by LAAD and its customers in the prevailing global economic crisis.
This investment and development company is part of the private Latin American Agribusiness Development Corporation group. At the end of its financial year till October 2008, the group’s balance sheet total was 288 million dollars and its loan portfolio 256 million dollars. The result for the same financial year was 7.2 million dollars. Profitability has been extremely stable and its financial position good.
Foodstuffs in an important position
“Production of foodstuffs and agriculture in general currently rank high on the list of priorities of development finance institutions,” says Jyrki Halttunen of Finnfund.
“Through LAAD we can support small companies that are often family-owned as they export their products and generate export earnings for their country. We cannot finance them directly so an experienced and skilled partner is an ideal solution for us.”
For more information, contact Treasurer Jyrki Halttunen, tel. +358 9 3484 3318, forename.surname@finnfund.fi
