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This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision.
Summary of Project Information (SPI)
Latin American Agribusiness Development Corporation S.A.
Latin America Region
Development Finance Company
LATIN AMERICAN AGRIBUSINESS DEVELOPMENT CORPORATION S.A.
Date SPI disclosed
October 31, 2001
Projected board date
December 5, 2001
Invested: February 21, 2002
Signed: February 8, 2002
Approved: December 21, 2001
Project sponsor and major shareholders of project company
The shareholders of Latin American Agribusiness Development Corporation (LAAD, or the company) are twelve multinational finance and agribusiness corporations, featuring some of the first tier names in banking and industry, namely: Bank of America, Borden, Cargill, Dole, Rabobank, J.P. Morgan, Unilever Bestfoods, Deere, Novartis (previously Gerber), Monsanto, Agribands and Goodyear Tire. They have each an equal stake in the LAAD. To protect the company's mission and maintain certain continuity, the sponsors established strict rules for the transfer of shares, creating a very stable institution. In addition, they established the governance rules, the reporting and disclosure policies, the accounting standards and the ethical underpinning that constitute LAAD's hallmark.
Total project cost and proposed IFC investment
The project consists of a proposed US$20 million credit line to LAAD.
IFC investment as approved by Board
IFC Investment (million USD)
Location of project and description of site
LAAD is headquartered in Coral Gables, Florida and maintains seven regional offices throughout the region, as shown in the following table.
El Salvador, Belize
Jamaica, St Vincent
Loans are made in all the above countries where LAAD normally operates.
Description of company and purpose of project
Incorporated in Panama in 1970 with US$2.4 million in equity, LAAD started lending in Central America. Subsequently, it expanded also to South America and the Caribbean, disbursing in excess of US$375 million to over 750 agribusiness projects in 16 countries. LAAD is one of the very few, or possibly the only, financial institution targeting exclusively the agricultural sector and doing it on a profitable basis for almost thirty years. According to company estimates, the projects it financed during these three decades created 65,000 jobs and generated US$450 million in foreign exchange earnings annually.
credit line will provide financing to private Latin American and Caribbean companies engaged in agriculture, livestock, fishing and forestry. In light of the lack of long term financing available to this sector, the project will have the following development impact:
Provide long-term, possibly fixed rate financing to this sector;
Reduction of rural poverty through job creation in rural and semi-rural areas;
Increase and higher quality of agricultural output through the ability to purchase, on credit, the required quality inputs;
Demonstration effect of the viability of an institution such as LAAD, that can possibly be replicated in other regions.
IFC’s proposed financing will enable LAAD to offer long-term funds to selected clients who need it for the success of their enterprises, but can not obtain it due to the current five-year maximum tenor of LAAD's commercial funding. The on-lending will be made to small and medium size export agribusiness firms operating out of South and Central America and the Caribbean. The loans will average US$400,000.
This project will enable IFC to make one of its first experience in the difficult field of rural finance and possibly replicate the model, or apply the lessons learnt to future projects in this and other regions. Finally, IFC is expected to make a positive contribution to environmental practices in the agribusiness field.
Environmental and social issues - Category
This is a category FI Type 2 project according to IFC’s environmental and social review procedure. LAAD has committed to undertaking an environmental and social review of each subproject financed with IFC funds. LAAD must require all subprojects to be carried out and operated in compliance with the applicable environmental, health and safety (EH&S) requirement of the host country and also IFC’s EH&S Guideline for Pesticide Handling and Application. In addition, LAAD must require subprojects whose total cost is less than US$500,000 must be consistent with IFC's Microfinance Exclusion List. Further, subprojects whose total cost is US$500,000 or greater must be carried out in accordance with IFC's safeguard policies, be consistent with IFC's Exclusion List, and meet the host country requirements and IFC’s pesticide guideline. In addition, LAAD must require any Category A subproject to meet the World Bank Group’s applicable environmental, health and safety guidelines and will not make a loan to any such subproject prior to receipt of IFC's clearance. LAAD must participate in environmental training as may be required by IFC, develop an environmental management system, and provide an annual environmental performance report.
To contact the project company, please write to:
Oscar M. Alvarez, Chief Financial Officer
75 Valencia Avenue, Suite 1050
Coral Gables, FL 33134
Phone: (305) 445-1341
Fax: (305) 446-8447
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