FMO joins ING-led $117m loan for Oaktree-backed Trans-Oil

Dutch development bank FMO participated in a $117 million pre-export facility to Oaktree-backed Moldovan agribusiness Trans-Oil, as part of efforts to address food security challenges stemming from Russia’s invasion of Ukraine.

FMO’s $25 million participation in the ING-led pre-export loan facility for Trans-Oil will help support the transshipment of about five million tons of grain to international markets.

Headquartered in the Moldovan capital city of Chisinau, Trans-Oil is the only producer and exporter of sunflower oil in the country, which shares a long border with Ukraine. The company sources for more than 500 farms, operates two grain terminals in the only operating port in Ukraine along with storage and production assets in Serbia and Romania. Most of its sales are to international traders and exporters in the EU, Middle East and North Africa.

“While Ukrainian Black Sea ports are not able to function properly and a lot of grain is stuck in the country, companies like Trans-Oil play a pivotal role in ensuring a continued supply of much-needed food. They can offer an alternative and safe export route for Moldovan, as well as Ukrainian, grains via the Danube River to Romania and make an important contribution to global food security, which we fully support,” FMO agribusiness, food and water director Pieternel Boogaard said.

FMO explained in its statement that although Trans Oil has attracted interest from commercial banks, many opted to limit working capital funding, following Russia’s invasion of Ukraine in February.

Bram Reijnen, head of food, agribusiness and water for Europe, Asia and North Africa at FMO, declined to describe the terms or conditions under which commercial lenders stopped doing business with Trans-Oil or how the possibility of conflict was considered in the years leading up to the war.

He told Agri Investor that a sharp rise in sovereign bond rates, fed by early fears the conflict itself could spread into Moldova, played a role in FMO’s decision to nearly double its existing exposure to Trans-Oil.

“That definitely for us, was also something that made us say ‘we need to support a company like Trans-Oil’ because they play a vital role in the economy of Moldova, a nation that has been a long-standing client of ours,” said Reijnen, who joined FMO in August 2019 after 13 years with ING, according to his LinkedIn profile.

The pre-export facility offered by ING, an Amsterdam-headquartered bank, will help finance logistics costs, including payments to the 27 percent of Moldova’s labor force employed in agribusiness. FMO has lent to Trans-Oil since 2011 and also advises the company on ESG.

FMO is among a number of developmental finance institutions, including the International Finance Corporation and the European Bank for Reconstruction and Development, which have lent to the company prior to an investment by Oaktree Capital Management in June 2019.

In September, EBRD head of agribusiness for Eastern and Central Europe, Russia and its former Republics, Wojtek Boniaszczuk, highlighted Oaktree’s investment in Trans-Oil to Agri Investor as among the indications the company had “graduated” from DFI support.

“You could argue, with a company like Trans-Oil, is there still a role for a state-owned bank to play? I think in the current context there certainly is,” Reijnen said when asked about Boniaszczuk’s judgment. “At the moment, our financing is something that is not often offered by commercial banks. Given the situation where we are, at this moment we find it makes sense to roll-over and continue our commitment to Trans-Oil.”