EBRD joins syndicates backing Turkish ag exporter

The European Bank for Reconstruction and Development has extended $48 million in loans to support Tiryaki Agro, a Turkish agricultural supply chain manager with plans to expand organic exports.

Part of the EBRD’s investment comes in the form of a $28 million contribution to a $230 million loan facility offered by an ABN Amro-led syndicate that also includes Dutch development bank FMO, Rabobank and UBS. In addition, the EBRD has contributed $20 million towards a $65 million facility offered by FMO and Proparco, the investment arm of the French Development Agency.

Founded in 1965 as a lentil processor, Tiryaki Agro manages a processing and export supply chain that includes pulses, grains, nuts, corn, feed, oilseeds and other commodities. The family-owned company operates facilities at 10 ports within Turkey and reports $1.4 billion in annual sales through exports to about 80 countries.

The EBRD’s relationship with Tiryaki Agro began with 2012 debt refinancing that made the developmental finance institution a shareholder in the company and has gone on to include a total of $46.5 million in total financing.

Principal banker Nazli Arikan, based in Istanbul, told Agri Investor that the EBRD has been working with Tiryaki Agro to integrate more local farmers into its existing supply chain as the company reorients its strategy from purely conventional commodities to offering more organic products. Arikan declined to estimate how much of Tiryaki’s current production is currently organic or specify goals of the company’s push to expand its participation in organic markets.

“Going forward, they will continue to focus on the organic business, which will help them expand into new markets and region,” said Arikan, mentioning North America and Europe as markets being of particular interest.

Arikan added that while commodity-trading businesses in Turkey are able to access capital for investments from commercial banks, working capital is often harder for them to come by.

“In the market, there are only limited sources for such funding,” Arikan said. “The EBRD and some other DFIs and IFIs are the only sources available in the market for a client like Tiryaki to access financing for the long-term working capital requirements.”

Arikan declined to provide any additional detail about interest rates or covenants attached to the loans EBRD provided to Tiryaki. She also declined to identify the facilities’ exact term other than to confirm that they were of a longer tenor than what is available to the company elsewhere in the market.

International investors continue to display “significant appetite” for exposure to Turkey’s agricultural sector, according to Arikan, who mentioned recent unspecified foreign investments in the country’s poultry, commodity trading and dairy sectors as examples.

“From private equity companies and strategic investors to the financial investors, there’s an ongoing development in terms of acquisitions and mergers. There are still lots of things ongoing in the market,” said Arikan.

Last April, the EBRD provided a €20 million facility to support the organic expansion plans of another Turkish agribusiness, pulse and rice producer Yaylo Agro. In January, the institution also provided a $5.3 million loan to Altiparmak Gida, a family-owned honey producer in Turkey and a €32 million credit facility to Peyman, a Turkish dried fruit and nut producer backed by European mid-market private equity firm Bridgepoint.