Development finance institutions (DFIs) FinDev Canada and the Netherlands Development Finance Company, which also is known by its Dutch acronym FMO, recently provided a syndicated loan of USD 72 million to the US-based, for-profit Latin American Agribusiness Development Corporation (LAAD). LAAD will use the funds to finance term loans and revolving lines of credit to small and medium-sized enterprises (SMEs) involved in agriculture in Latin America and the Caribbean, with the goal of spurring market development and job growth in rural communities. LAAD requires that each of its loans is used according to an “environmental and social assessment.” The organization also provides advisory services, including to support its borrowers in attaining certifications of practices such as fair trade. The breakdown of the funding shares between FinDev Canada and FMO has not been released.
FinDev Canada’s Director of Investments Paulo Martelli holds, “LAAD’s agribusiness expertise and successful track record in the region makes them an ideal partner for us to contribute to significant impact in the rural/agricultural sector in Latin America, so important for job creation and poverty reduction. It also presents us with the opportunity to indirectly support SMEs during the COVID-19 crisis, when financing is difficult to obtain.”
LAAD finances agribusiness SMEs in Latin America and the Caribbean, with the mission “to promote sustainable economic and social development in Latin America.” Through its loans, which typically range in term from five to seven years, LAAD invests in projects active in “all phases of production, processing, storage, services, technology and marketing.” During the year ending October 2019, LAAD disbursed 343 loans in 15 countries, totaling USD 307 million. In that same year, the company reported average return on assets of 2.5 percent and average return on equity of 12.7 percent.
FinDev Canada, also known as the Development Finance Institute Canada, was established in 2018 as a wholly owned subsidiary of export credit agency EDC (Export Development Canada), with the goal of supporting job creation, sustainable development and the economic empowerment of women. FinDev Canada supports the private sector in Latin America and the Caribbean, as well as sub-Saharan Africa, with direct loans, guarantees, structured financing and equity placements. As of December 2019, the organization reported total assets of CAD 187 million (USD 137 million).
Established in 1970, FMO is 51-percent held by the Dutch government and 49-percent by private sector institutions. The bank works toward the UN’s Sustainable Development Goals by funding capacity development as well as placing debt and equity investments in sectors such as agribusiness, financial institutions and energy. For the year 2019, the bank reported a net profit of EUR 120 million (USD 131 million) on an investment volume of EUR 2.9 billion (USD 3.2 billion).
By Jessica McLeod, Research Associate
Sources and Additional Resources
LAAD homepage
https://www.laadsa.com/
FinDev Canada homepage
https://www.findevcanada.ca
FinDev Canada 2019 Financial Statements
https://www.findevcanada.ca/sites/default/files/annual-report/2019/downloads/2019-annual-report-en.pdf
LAAD Annual Report 2019
https://www.laadsa.com/pdf/AnnualReport2019%20WEB.pdf
Previous MicroCapital article on FMO
https://www.microcapital.org/microcapital-brief-netherlands-development-finance-company-fmo-loans-5m-to-vitas-palestine-for-microfinance/
Previous MicroCapital article on FinDev Canada
https://www.microcapital.org/microcapital-brief-cdc-findev-canada-mastercard-foundation-opic-proparco-sponsoring-2x-invest2impact-competition-offering-1m-to-high-potential-women-entrepreneurs-in-east-afri/
Previous MicroCapital article on LAAD
https://www.microcapital.org/microcapital-brief-latin-american-agribusiness-development-corporation-laad-borrowing-45m-idb-smes-farming-value-chains-improving-impact-measurement/
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