Cordiant, an emerging markets-focused private debt fund manager, has contributed $10 million to a $100 million financing facility for Brazilian company Fiagril alongside global agricultural group Bunge International Commerce.
It financed the facility from its Cordiant Emerging Loan Fund IV, which focuses on floating rate, private loans in emerging markets. The fund held a first close in April last year on $250 million, and is still open to commitments.
Fiagril Participações, based in Mato Grosso in Western Brazil, is a major supplier of seeds, fertiliser and other materials to Brazil’s agricultural industry, primarily to the region’s soybean farmers, Cordiant said in a statement confirming the deal.
Fiagril will use the funding to purchase seeds and fertiliser to sell to farms in Mato Grosso state ahead of the southern hemisphere’s 2014 harvesting season, Cordiant said.
Cordiant chief executive David Creighton said in the statement: “This loan is an excellent opportunity for the CELF IV fund to diversify into one of the fastest-growing agricultural markets in the world, while staying true to the conservative risk management principles Cordiant has always employed. Acting in syndication with a world-class global business like Bunge means Cordiant benefits from Bunge’s unparalleled presence on the ground in Brazil, which will significantly enhance the risk mitigation of the loan.
“Banks, both domestic and overseas, lack the presence on the ground to undertake the due diligence of farmers needed to ensure that regional distributors such as Fiagril are not left with bad debts. This means that demand for lending within the Brazilian agricultural sector is not being met by the banking sector, creating an opportunity for overseas private debt investors to step in and provide the necessary funding, with attractive risk-adjusted spreads.”
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