The FMO is looking to expand its agribusiness portfolio and could even double its exposure to the sector, as it moves away from investing in China to focus on investments in Latin America and Africa, FMO director Suzanne Gaboury has told Agri Investor.
She said the €9 billion institutional investor and bank had committed €700 million or 8 percent of its funds to agribusinesses by the end of 2015 and had already invested well over €70 million so far this year. She would not reveal a target for the end of the year.
Gaboury, who joined FMO 10 months ago, said increasing the bank’s agribusiness portfolio was crucial to having a growing developmental impact.
“In the agribusiness space we will probably be focusing more on African, [Eastern Europe, Central Asia, and SE Asia] and Latin American countries rather than China.”
She added: “China is interesting from an emerging market point of view, but it is very challenging,” said Gaboury, as an investor needs to be on the ground to monitor clients and opportunities.
“Argentina is very much in our focus,” said Gaboury. “We are very keen on the rest of Latin America, too. We are making a big push.”
FMO recently loaned $15 million to Peruvian fruit exporter and dairy producer Pampa Baja, which Gaboury hopes to follow up with more investments in the country. It is the only investment in Latin America this year, but Garboury says there are more in the pipeline. Last year, FMO invested $40 million in inputs business Compania Argentina de Granos in Argentina, $15 million in oilseed crushing business Vicentin and €170,000 in Peruvian food company Machu Picchu Foods.
“In Latin America we are looking through the lens of our farmer finance programme, where we look to reach people at the bottom of the pyramid through various farmer-finance scheme,” said Gaboury. “We always [invest] along the value chain, from farm to fork, [bringing in] the bigger traders and the smaller farmers.”
In African countries, Gaboury said financing would be split more evenly between trading, production and processing businesses, instead of farmer finance.
Risks include that risk posed by the avian flu virus in central Africa. In Latin America, it would be reverberations coming from the economic crisis in Venezuela.
FMO invests in agriculture in emerging markets through loans and funds, and occasionally growth equity.