The European Bank for Reconstruction and Development (EBRD), the development finance institution dedicated to promoting free market economic principles in the central and eastern European region, wants to increase its investment into agribusiness further, according to Gilles Mettetal, director of Agribusiness at EBRD.
It is preparing to sign off on four transactions in the coming weeks and made nine investments in August, including a €20 million loan to Astarta, agribusiness operator and sugar producer in Ukraine and a €9 million loan to Globino, a Ukrainian meat processing company.
EBRD does not have a set allocation or target for agribusiness investment but is primarily driven by demand in the region, Mettetal at EBRD told Agri Investor. The DFI invested close to €1 billion into agribusiness during 2013.
The DFI has most recently set up a presence in the Mediterranean and North Africa, opening offices in Cyprus, Morocco, Tunisia, Egypt, Turkey and Jordan, where it is now a major private finance institution, according to Mettetal. “Much of our established region was communist in the past where the market economy was not developed. This has improved a lot in places such as Poland, but we are finding the same challenges in our new MENA and Mediterranean locations,” he told Agri Investor.
Private investors who are interested in agribusiness investment in the MENA and CEE regions can take advantage of EBRD’s political connections to national governments, and seek informal advice on investment in the region’s agribusiness sectors at no charge. “What we can offer to interested private investors is the advantage of our political dialogue with governments,” he said. “One example where we have been successful in improving the market economy in agribusiness is in Ukraine. When we began operating there, the grain market was barely self-sufficient. Today it is the third largest grain exporter globally. Governments listen to us, more so than they would listen to a commercial bank, for example,” said Mettetal.
Agribusiness already accounts for 40 percent of EBRD’s budget; it works on supporting financially sound and established agribusinesses, often using debt financing which represents 80 percent of the DFI’s portfolio. EBRD typically take a minority stake in equity deals, co-investing with other private financiers or DFI’s.
The DFI will be part of the Union for the Mediterranean’s food security conference in March next year. The two parties recently signed a memorandum of understanding to further develop EBRD’s presence in the region.