Project detail - Tuan Loc Commodities Company Limited

Who is our prospective customer?

Tuan Loc Commodities (“TLC” or “the Company”) is a one of the leading Robusta coffee processor and exporter companies in Vietnam. Established in 2021, the company has two processing facilities for green coffee beans. TLC has a vertically integrated physical trading model; it buys coffee from local suppliers (mainly smallholder farmers via aggregators), processes it, and exports it to mainly international roasters and trading houses. TLC is part of Tuan Loc Construction Investment Corporation or Tuan Loc Group (“TLG” or “the Group”), a diversified Vietnamese conglomerate active in real estate, logistics, infrastructure and industrial sectors.

What is our funding objective?

FMO proposes a USD 12 million long-term loan, financed by Building Prospects, to TLC for the construction and operation of a new green coffee processing factory in Dong Nai Province. Additionally, FMO will propose a USD 20 million uncommitted short-term (1-year) fixed working capital loan, financed by FMO-A. The working capital facility can be renewed annually at FMO's discretion. The transaction is a bilateral loan between FMO and TLC.

Why do we want to fund this investment?

The proposed investment in TLC is strongly aligned with FMO's strategy, focusing on strengthening local agricultural value chains and promoting certified and traceable exports. Vietnam is a focus country and the world’s second-largest coffee producer, where the sector provides livelihoods to hundreds of thousands of smallholder farmers and remains a critical export driver. This long-term capex facility will support the further vertical integration of the company, while the short-term working capital facility will enable the company to improve its sourcing capacity, with an increasing focus on supply chain traceability and certification. FMO’s investment aims to support activities that contribute to climate mitigation and climate adaptation, contributing to SDG 13, in line with the FMO's methodology to determine the green finance attribution. FMO’s investment also aims to support activities that contribute to inclusive growth contributing to SDG 10.

What is the Environmental and Social categorization rationale?

Tuan Loc Commodities (TLC) is rated as Category B+ due to inherent risks in the processing of coffee related to IFC Performance Standards 1-4 (within site boundaries) and also supply chain related risks for PS6 and associated human rights issues (potential outside site boundaries). With the current management practices of TLC and the anticipated actions to be completed via the FMO Environmental and Social Action Plan, these risks are manageable and are not considered to have any irreversible effect.