news - Monthly transaction overview – August


Monthly transaction overview – August

September 7, 2020

As a leading impact investor, FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development and has a 50-year proven track-record of empowering people to employ their skills and improve their quality of life.

These months we focus on business continuity in the wake of the COVID-19 pandemic. It is precisely now, during these times of crisis, that it is important to continue to invest in developing economies that are already or expected to be hit hard by the pandemic. While local governments are working hard to minimize the impact on their people and economies, we are needed now more than ever. Hence, we continue to empower entrepreneurs in developing economies to build a better world and boost resilience to withstand the pandemic.

Financial Institutions

Banco Promerica Costa Rica
Universal bank in Costa Rica
FMO has activated a USD 10mln uncommitted facility for long standing client Banco Promerica de Costa Rica. The proceeds will be utilized to finance green (i.e. EDGE certified) residential construction. Green residential real estate is a new market in Costa Rica. At first, it was a difficult sell: the costs of certification were considered high, real estate developers were hesitant to change their ways, and there was limited awareness among home buyers. But through perseverance and commitment to their long-term vision, Banco Promerica Costa Rica has now started financing three green residential real estate projects in the San Jose area.

Banco Internacional
Universal bank in Ecuador
FMO signed a USD 20mln high impact transaction with existing client Banco Internacional, the 5th largest bank in Ecuador. Ecuador has been severely hit by the COVID-19 crisis and by the drop in oil price, causing the country, which was already struggling with its high fiscal deficit to default on its debt obligations. Despite the country crisis, the Ecuadorian financial sector - which has experienced severe shocks in the past - has remained strong in terms of liquidity and capitalization. USD 15mln of FMO’s facility will be on-lent to SMEs, a segment that has severely been impacted by the crisis, yet remains crucial to support economic activity (SDG 8). In addition, USD 5mln of our loan will be used to support green clients and projects (SDG 13) and thereby FMO will provide Banco Internacional with its first green loan.  The proceeds are expected to target energy efficiency, green buildings and green transportation, for which there is great potential.

FirstRand Bank Limited
Universal Bank in South Africa
FMO has signed a USD 75 mln green loan with FirstRand Bank Limited as part of a USD225 mln IFC syndicate. The proceeds will be used to expand FirstRand’s climate finance portfolio from mitigation to adaptation and resilience, along with an increased focus on water resources, treatment and infrastructure. This transaction is the first dedicated green loan to be provided in South Africa and provides FMO an opportunity to develop a deeper relationship with FirstRand Bank, the second largest bank in South Africa and one of the leaders in South Africa’s climate finance sector.  

Pact Global Microfinance Fund 
Micro finance institution in Myanmar
FMO closed a highly inclusive USD 15 million term facility with PGMF. It has the biggest network in Myanmar and serves approximately 1 million clients, almost all of them female micro-entrepreneurs. This loan with tenor of 5 years enables to continue and expand supporting its clients during the difficult COVID-19 affected environment. It contributes to our reducing inequalities goal as Myanmar is a Least Developed Country and PGMF’s focus is on female entrepreneurs.

Agribusiness, Food & Water

Delta Wilmar Ukraine
Specialty fats producer
FMO will provide up to USD 35 million to finance a part of the acquisition costs for Chumak LLC, a top fast-moving consumer goods producer in the south of Ukraine. The acquisition will help unlocking Chumak’s full potential in the domestic market by increasing its market share in Ukraine and helping expand to foreign markets, generating more local tax revenues and jobs in an area with high unemployment rates.

Energy/ NL Business

Fasobiogaz SarL
Biogas project in Burkina Faso
FMO has provided a EUR 200.000 AEF repayable grant to Fasobiogaz SarL. The company, owned by a shareholder from The Netherlands, converts organic waste into biogas to generate electricity in Burkina Faso. The projected electricity production is 3,640 MWh per year, this means 9,476 equivalent people connected. The digested biomass is sold as fertilizer and the heat produced in the digestion process can be sold and used for refrigerated storage. The grant provided by FMO will be used to finalize construction and to ensure compliance with the IFC Performance Standards. The benefits of the project are clear: the biowaste is not dumped in the open air, causing emissions, odor and spreading diseases, but it will be converted into electricity and fertilizer.

Private Equity

African Rivers Fund III
New fund by XSML Capita
XSML was co-founded by two former FMO employees and today manages two private equity funds in Central Africa: the Central Africa SME Fund and African Rivers Fund I. Both funds are high-impact funds that provide scarce capital to SMEs in frontier markets, and FMO has invested in both. XSML is currently raising its third fund: African Rivers Fund III. The core geographical focus of the Fund will include Angola, the Democratic Republic of the Congo and Uganda. SME financing is scarce in the regions where the Fund will operate, and by investing FMO will help empower local entrepreneurs.

Bangladesh Managed Account CV / ACI Motors
Distributor/manufacturer of agricultural equipment and motorbikes in Bangladesh
Through Bangladesh Managed Account CV, FMO will invest USD 14.8mln in ACI Motors, a market leader in the distribution of agricultural machinery in Bangladesh, and the sole distributor/manufacturer of Yamaha motorbikes in the country. The Company was formed in 2007 with a vision to increase farm mechanization. FMO’s investment will be used to replace bridge financing raised to build a local manufacturing/assembly plant, and to provide working capital for the Company’s financing scheme for agricultural equipment. This is expected to support access to agricultural equipment, helping to improve yields and address the significant labor shortages that Bangladesh faces during peak harvesting season. The creation of a local assembly/manufacturing plant supports job creation and leads to import substitution.

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