AGRI3 FUND FGR

Who is our (prospective) customer?

The AGRI3 Fund FGR, incorporated in 2020, with the Dutch Government as anchor investor, is a blended finance vehicle intended to mobilize additional public and private capital for the transition of food and agriculture systems in emerging markets towards sustainable, climate-resilient practices and processes that preserve forests and natural ecosystems and support the long-term well-being of communities. AGRI3 Fund provides credit risk mitigation products (such as guarantees) and technical assistance to enable global, regional, and local financial institutions to make impactful investments and supports the financial institutions to build experience in transacting in Agri3’s investment themes. The Fund Manager advisors are Fount and Cardano.

What is the funding objective (type of activity)?

FMO will invest a USD 35mln first-loss equity investment in Agri3 Fund.

Why do we (want to) fund this investment (our role)?

The AGRI3 Fund is expected to have a significant demonstration effect for commercial banks and other financial institutions. FMO's involvement will support the execution of AGRI3 Fund's investment strategy, facilitating its growth and providing the flexibility for other banks and investors to join the fund. This collaboration will also help mobilize additional resources. Moreover, this investment aligns with FMO's commitment to scaling its impact on sustainable agriculture and forest protection. By leveraging blended finance, FMO can extend its impact beyond its current product offerings. Lastly, Agri3 may be eligible for a green label because of its contribution to Climate Mitigation and Adaptation.

What is the Environmental & Social categorization and rationale?

AGRI3 is classified as an E&S category-B+ opportunity, as it upholds a portfolio of elevated though manageable E&S risks that can be mitigated through strong environmental and social management systems (ESMS) and capacity at the partner bank (PFI) level. Key E&S aspects are allocated at the level of sub-projects of the PFIs, and include biodiversity and sustainable land use, soil and water quality and quantity, labor rights and working conditions (specifically seasonal/casual workers in agri-sectors), and socio-economic characteristics of smallholders and local communities. Projects also operate in a context of climate change, requiring due attention to both climate mitigation and adaptation/resilience. AGRI3 has identified these risks and maintains an adequate ESG risk management system with senior expertise engaged through an E&S advisory panel: FMO will explore further options to support both ESG risk and impact management during the due diligence.