Cordiant Capital has given Peruvian agricultural exports company Agrícola Chapi a $130 million credit facility to support the family-owned business’s growth plans.
The loan is a mix of structural and subordinated debt and will be disbursed in stages until March 2024. Cordiant said capital was drawn from its global credit funds but did not specify any vehicles.
Agrícola Chapi plans to use the funds to double its avocado growing capacity to 1,200ha and intends to expand its table grapes growing capacity fivefold to 900ha.
“A significant advantage of Peruvian avocados is their export season, which runs roughly from May to August – volumes can start in April and go up to October,” Cordiant Capital managing director and head of agriculture value chain Cédric Garnier-Landurie told Agri Investor.
“This is a great addition to the Mexican export season, which runs from August to May. This time frame has afforded Peruvian avocados a fantastic window of opportunity, as Peru has been able to supply avocados when the US market has had limited availability. Additionally, Peru has the largest share of European avocado imports, with one in three avocados sold in Europe from Peru.
“The headwind for Peru is its own production volumes. If sold to the same destination, it can suppress unit prices as experienced in 2022. One way of mitigating this price risk is the new phytosanitary agreements signed by Peru with new destination countries to expand its export markets for avocado.”
Garnier-Landurie added that Peru surpassed Chile as the largest global exporter of table grapes in 2022, due it its development of “new genetics table grapes demanded by consumers from US, Europe and as far as Asia.”
Agrícola Chapi preferred to use a loan to support its growth plans because it wanted a non-dilutive option, he confirmed, adding that “in the coming years, an equity investment could be considered.”
The business already has commercial agreements in place with the likes of Walmart, Costco, Kroger and Tesco, among others.
Agrícola Chapi’s growth plans mean the business must acquire farmland assets in a market that is experiencing price growth an increased competition.
“Price variations vary depending on the region, but land market [assets] with water licenses, infrastructure and conducive weather for permanent crop production has been continuing to rise and is in demand by local and foreign agriculture operators,” said Garnier-Landurie.
“Over the past few years, a lot of Chilean, Argentinian and Spanish producers have been buying Peruvian land to produce counter seasonal crops to their legacy farmland operations. The weather, ever-increasing export channels and trained labour force has been conducive to the tremendous expansion observed in the country over the last two decades.”
A statement from Cordiant Capital said Agrícola Chapi is the first avocado and table grape producer to be certified as a sustainable water manager by the Alliance for Water Stewardship, which is a global standard for water stewardship.
The company also founded Horizonte, an NGO made up of schools in Peru’s Ica and Casma regions, which highlights and promotes Peru’s coastal biodiversity in partnership with Huarango Nature, Kew Royal Botanic Gardens and Sainsbury’s UK.
Garnier-Landurie confirmed the credit facility includes covenants aimed at ensuring the loan is used for sustainable practices and initiatives.