news - FMO supports Ukraine’s grain exports and global food security through USD 31mln loan to agribusiness company Trans-Oil Group

FMO, the Dutch entrepreneurial development bank, announced today the signing of a USD 31.3mln term loan facility with its existing client Trans-Oil Group to finance the origination and export grain from Ukraine to the countries affected by the food crisis. The loan will contribute to economic wellbeing of Ukrainian agri-producers and alleviate grain shortage and high prices. The facility comes along with the long-term commitment of Trans-Oil Group to advance its supply chain management and to take climate resilience actions.

Trans-Oil Group (TOG) is a vertically integrated agribusiness group based in Moldova with operations in Romania, Ukraine, and Serbia. The company is focused on buying, processing and transporting grain, animal feed, and oilseeds from local farmers. In Moldova, agriculture is one of the main pillars of the local economy, contributing to one-sixth of Moldova’s total GDP. The company is an important part of that, employing nearly 3,000 people across Moldova, Romania, Ukraine, and Serbia, and providing farmers with access to markets in the EU, Turkey, the MENA region, and Asia. Over the years, TOG has grown into the largest regional agribusiness group and built up a strong track record.

The Russia-Ukraine War has had significant effects on the global supply chain. The logistics chain in the Black Sea region is no exception, limiting the export of Ukrainian grains and vegetable oils. As Russia and Ukraine are two of the largest suppliers of grains across the world, it has led to a significant shortage in the market, TOG is in the unique position to be able to provide one of the few alternative logistic routes and continue to facilitate the export of goods.

FMO has had a long-standing relationship with its customer TOG, dating back to 2011, when FMO provided TOG with various credit lines. Furthermore, FMO has assisted in improving TOG’s overall sustainability and corporate governance strategy. However, due to the Russia-Ukraine war, many commercial banks have limited their working capital funding options. Additionally, the company’s working capital needs have increased significantly, with commodity prices such as fertilizer and fuel increasing by as much 300%.

This has led to FMO providing a new a USD 31mln term loan facility. This facility will help TOG to successfully execute its mid-term strategy of successfully managing its agri-supply chain without major interruptions, while contributing to SDG 2 of Zero Hunger by continuing to enable the export of Ukrainian food crops into the global markets.

Pieternel Boogaard, Director Agribusiness, Food & Water at FMO, said, “FMO is pleased to extend its support once again to its long-term customer Trans-Oil Group in these challenging times of geopolitical unrest, high interest rates and threatened food supply chains. TOG’s strong business and financial performance, its commitment to sustainability and its importance for the sector in Moldova and now also Ukraine, make the company a great example of good entrepreneurship and strong resilience.”

Vaja Jhashi, CEO at Transoil Group, said, “We are pleased to have increased our cooperation with FMO, our long-standing partner, with this new transaction dedicated to the origination of Ukrainian goods. Despite the geopolitical environment, Trans-Oil Group is fully dedicated to the grain origination in the region with substantial investments contributing positively to the global food supply chain and in this respect, FMO support is key for the Group.”

This transaction follows on the heels of FMO’s USD 25mln participation in the annual ING-led Pre-Export Facility, which was signed in July 2023 and reached up to USD 200mln. In addition to providing impact in line with SDG 2, these transactions will also contribute to Climate Action, as TOG will take further steps towards climate adaptation as it works on achieving its Environmental & Social Action Plan as part of FMO’s required E&S risk management. Furthermore, the transaction will support SDG 8 (Decent Work and Economic Growth) through continued employment for TOG’s workers, and SDG 17 (Partnerships for the Goals) through mobilizing funds and commercial investors.