CFC/2013/02/0085FA: Partnership with the EcoEnterprises II Fund (EcoE II)
EcoEnterprises Partners II L.P. Latin America Various USD 27 mln (current fund size) USD 500,000 (equity), USD 25,000 (as a grant provision to cover administration and legal costs) Co-financing Main other current investors are the Dutch Development Financial Institution FMO, the Interamerican Development Bank (IDB) and the European Investment Bank (EIB)
Submitting Institution Location Commodity Total Cost CFC Financing
EcoE II seeks to invest mezzanine capital in small companies with a proven business model at expansion stage which are active in the sustainable agriculture and forestry (products) sector. The targeted investee companies supply into a continuously growing market for organic food products and certified wood predominantly in the US (through main stream retail channels such as Walmart/ Home Depot and similar dominant food retailers and home improvement stores). The CFC will provide funds to capitalize EcoE II and finance its investment activities. Adding value to primary products that are cultivated and/or processed in an environmentally sustainable way can have a significant development impact when commercial
viability can be proven for all value chain stakeholders. The vast and globally appreciated natural resource base of Latin America can be seen as a comparative advantage that presents a widely untapped opportunity for sustainable food and timer products out of the region. As of to date a similar fund focusing on sustainable food and timber production with a clear commercial focus does not exist. The existing investment pipeline is an outcome of the most successful (predecessor) EcoE I Fund investments in start-up enterprises and informal businesses since the year 2000, which have in the meantime graduated into companies with a proven business model that are ready to expand. EcoE II seeks to consolidate the promising results of EcoE I and bring 12 to 15 suc-
cessful individual investments to a level that will make enterprises interesting for purely commercial investors and banks. Investments will demonstrate that the sustainable use of natural resources can be commercially viable and indeed can prove to be a competitive advantage. Success could lead to widespread recognition and replication by commercial funds and to a more receptive regional banking sector. By the end of 2014, EcoE II has so far invested in six companies, which are engaged in eco/organic niche products such as tea, juices and dried fruit from the Amazon. None of the companies is considered “at risk� and all are showing substantial growth in sales. EcoE II pipeline is substantial with a number of further closings imminent.
CFC/2013/02/0086FA: Partnership with the Moringa Agroforestry Fund
Moringa Agroforestry Fund S.C.R. Latin America/Africa Various EUR 50 mln (current fund size) USD 1,500,000 (equity), USD 75,000 (as a grant provision to cover administration and legal costs) Co-financing Main other current investors are FMO, PROPARCO, the Spanish Government (AECID) and the Latin American Development Bank (CAF)
Submitting Institution Location Commodity Total Cost CFC Financing
The CFC will provide funds to the Moringa Agroforestry Fund which seeks to invest in African and Latin American agroforestry projects that are able to commercially compete with deforestation drivers (like cattle ranching, crop farming and timber harvesting) while generating a clear positive impact on local populations and the environment. Moringa will invest in manageable scale agroforestry projects (between 3-15,000 ha/project) which usually have an industrial nucleus (being the investee company of Moringa) and a wider circle of integrated smallholder farms/value chain partners in its vicinity. The fund seeks to invest in 12 to 15 individual investments. Land degradation and the necessity for further intensification of agricultural production on a sustainable basis are two key issues for development of many countries in Latin America and Africa. Commercially viable agroforestry systems allow for intensified land
use with diversified (risk mitigating) income streams, while at the same time rehabilitating or even improving degraded land. Marginal land is frequently occupied by the poorer strata of the population, which makes investment in commercial agroforestry systems a very powerful tool to alleviate poverty.
through a Technical Assistance Facility (TAF) that will provide grant funding for projects to strengthen the developmental aspects of individual investments. The CFC has been asked to provide remunerated management services for this Facility and is currently developing an appropriate operation structure for TAF.
All Moringa investments are required to have a demonstrable positive impact on the environment and the livelihoods of local populations. Through its investments, Morgina targets a total of 8,000 new jobs created with an income effect on 35,000 dependants. In addition, some 60,000 outgrowers are expected to be associated to commercial investments of Moringa, with a development impact on 340,000 dependants. As an indicator for environmental impact Moringa targets to reforest at least 40,000 ha with 10 mln tons of carbon sequestrated. Impact will be monitored and measured through an internal E&S System Framework. Moringa investments will be complemented
In the meantime Moringa has closed its first deal in the form of an equity investment in an existing coffee plantation in Nicaragua, with the goal of developing an agroforestry based outgrower scheme that will enable participating smallholder to continue to grow coffee despite the devastating coffee leaf rust fungus. A second investment is likely to be made in Tanzania in cooperation the French cement producer Lafarge, who wants to source fast growing wood biomass for its energy consuming processing plant.
It is likely that further institutional investors will enter Moringa in 2015 and substantially increase the overall fund size. VI Summary of Ongoing Regular Projects 2014 | 73