Project detail - IDH FARMFIT FUND B.V.

IDH FARMFIT FUND B.V.

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Who is our client

Since its inception in 2008, the Sustainable Trade Initiative (“IDH”) has developed a market-based approach to smallholder value chain development. Currently, IDH works with over 600 companies, financial institutions, producer organisations, and governments in 12 value chains across 40 countries worldwide. As an evolution of its grants-based investments strategy, IDH established the Farmfit Fund (the “Fund”). To strengthen smallholder value chains and improve the livelihoods of farmers, the Fund will support a wide variety of actors ranging from traders to input providers, Agri SMEs and financial institutions across Africa, Asia, and Latin America.

Funding objective

The Fund will offer tailor-made financial instruments (debt, risk sharing, equity) and TA to a wide range of investees that sustainably engage with smallholder farmers. Its impact is further increased through leveraging commercial bank finance.

Why we fund this project

FMO will play an instrumental role in showcasing the viability of farmer finance. A dedicated team of investment professionals will focus on structuring and executing farmer finance deals. The team will be able to capitalize on IDH’s long track record in supporting smallholder value chains across the globe. FMO is additional in this project for several reasons: (1) Whereas the other investors focus on cash crops globally, FMO’s scope will include food crops in Africa thereby allowing the Fund to support projects with a high inclusivity level; (2) FMO will open its network of financial institutions and Agri corporates to the Fund; (3) With regard to ESG Additionality, FMO will support the Fund with the further development & implementation of its E&S Risk Management system.

Environmental and social rationale

The Environmental and social risks of the transaction have been classified as category A due to the broad portfolio of potential investees with different level of risks including business activities with potential significant adverse environmental or social risks and/or impacts that are diverse, irreversible, or unprecedented. The fund counts with dedicated E&S capacity, ESG risk frameworks appropriate to manage E&S risks. Although the fund will finance activities to strengthen smallholder value chains, their portfolio is exposed to supply chain risks, contextual, and legacy risks, and biodiversity risks, which must be managed in a manner consistent with all IFC Performance standards (IFC PS 2-8). The transaction includes an Environmental and Social (E&S) Action Plan with the objective of strengthening and supporting the implementation of the fund’s Environmental and Social Management System (IFC PS 1).

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Date Total FMO financing
12/22/2020 EUR 5.00 MLN
Country
Global
Sector
Agribusiness, Food & Water
Signing date
12/22/2020
Total FMO financing
EUR 5.00 MLN
Fund
MASSIF
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk Environmental & Social Category
(A, B+, B or C)
A