Carlyle’s €140m Unifrutti loan follows LatAm investor trend

Carlyle managing director Taj Sidhu says the loan fits within the Credit Opportunities Fund’s focus on non-sponsored borrowers and will partially be used to support expansion targeting markets in Asia.

The Carlyle Group‘s €140 million loan to fresh fruit company Unifrutti is part of the trend of institutional investors filling a gap left by European banks in Latin America, Roberto Viton, the founder and managing director at food and ag-focused advisory Valoral Advisors, told Agri Investor.

“We also see some of the names from the US market – like MetLife and Prudential –  becoming more aggressive in providing loans to the region,” said Viton. “The fresh fruit sector has been one that has been getting more attention.”

Carlyle bought up 100 percent of Unifrutti’s debut debt issuance earlier this month, providing it with the full €140 million debt financing package it was seeking. Unifrutti’s production assets are concentrated in Chile but the company is headquartered in Europe.

Institutional investors are increasingly interested in lending to already-indebted companies, especially in Chile and Peru, that have significant capital requirements and offer exposure to export-led growth amid growing fresh fruit trade between regions, explained Viton.

Carlyle managing director and head of European Credit Opportunities Taj Sidhu told Agri Investor that the loan does not reflect any particular focus on agriculture for the $2.4 billion Credit Opportunities Fund (CCOF).

Instead, explained Sidhu, the bond to Unifrutti fits within the CCOF’s focus on lending largely to non-sponsored, often family-owned borrowers looking for alternatives to bank or bond financing and traditional private equity.

In underwriting its loan, Sidhu said, his team drew upon Carlyle’s vast physical presence across markets to understand key trends shaping Unifrutti’s prospects.

Sidhu declined to disclose any details about crops likely to be of focus for Unifrutti beyond identifying Asian export markets like Japan as being a particular focus. He added that he sees the company’s broader growth prospects as tied to healthy eating trends in developed economies and growing middle-class consumption in developing markets.

Because Unifrutti was looking to both refinance existing debt and find a partner to help finance future growth, he said, the company found its needs likely too big for a single bank and too small for bond markets.

Sidhu declined to disclose financial terms for Carlyle’s loan to Unifrutti, which carries a 7.5 percent interest rate and is due in 2026, according to a New York-headquartered law firm that advised Unifrutti on the transaction.

Founded in 1948, Unifrutti is a producer, marketer and distributor of fresh fruit. Apples and table grapes are the company’s principal products and Unifrutti also supplies a variety of other crops including kiwifruit, avocados, lemons and others to customers in Europe, North America, Latin America, the Far East and the Middle-East.

“Very simply, they [Unifrutti] produce their products in the southern hemisphere and sell to the northern hemisphere,” Sidhu summarized.

Unifrutti is among the companies that have benefited from increasing Latin American trade with China and other markets in recent years, according to Viton, who highlighted cherries, lemons and kiwi as among the crops that have recently drawn interest of companies looking to expand.

“Some of these companies that used to be mainly packers and exporters are becoming more and more integrated upstream, so they want to have at least part of their supply coming from their own plantation,” said Viton. “We expect that we will see more alternative lenders coming to the market.”