SGCT-AgroInvest agro processing starch food banks financing investing

FINANCING

Following options are available:

International commercial prime banks
- Those can provide a direct loan depending on the country rating, field of business, collaterals for securing the loan, economic feasibility, equity portion by investors and the management team. Those factors also define the interest rates and repayment terms.
- In a consortium with a commercial bank, there is established Export Credit Agencies (ECA’s) which can ensure the financing against a certain country, financial and project risks. They are set up by country governments to promote their exporting industries. SGCT can facilitate the engagement of a suitable supplier (mostly from Europe) and its correspondent national ECA (mostly Denmark or Germany).
- Providing a buy- back or sales agreement for the product which can be secured by a financial instrument (e.g. bank guarantee) to act as a collateral for the payback of the loan.
- Supporting to find investors for the required equity portion
Local commercial banks which can provide a financial instrument confirmed by a prime bank or act in a consortium with those
Development banks (World, African, US, EU, other national)
- This requires usually a detailed application which is evaluated in a lengthy process. SGCT can support this process by preparing parts of the application and to follow up with the institute.
International development funds (OFID, Qatar, other governmental, etc.)
Local development funds (job funds, land banks, rural development, agriculture, etc.)
Partial grant funding from national funds for certain developing countries.
Direct aid funding from private foundations specializing in certain areas like farming or agro- processing in combination with investing

The straight forward way is through a loan repaid according to a certain schedule with a fixed interest rate. SGCT is supporting the efforts by its contacts with the relevant institutions. Those institutions mostly already understand the nature and schemes in the field of Agro- Processing.

SGCT is developing and participating in the financing models for the project with the stakeholders and institutes. Based on the data of the Project Definition and the business case, SGCT can provide all numbers for the investment into the factory and farming as well as for the operational cost. We then work together with certified accounting firms/consultants to prepare a comprehensive feasibility report including the EIA.

There are two typical ways to obtain financing for a project.

For selected projects in specific regions/countries, SGCT itself might want to take a minor equity position in the company. That means SGCT would make an equity contribution and will be a shareholder. SGCT would then take the role as “Project Owner”. This ensures the involvement and the role as a stakeholder during project development, operation and product marketing with a better result for the business success.

Following is an overview of categories of investors:

International private equity or wealth/pension funds

Those often got a special section for agricultural projects and for developing/emerging countries

International Venture Capital, more focused on financial result and leverage as a company shareholder
Local or selected Venture Capital, also out of SGCT’s network
- International companies which are in the field of business like major product off- taker, raw material providers, and land owners. They might have a direct business interest in the product or by- product for e.g. a lower price purchasing price of the product
- International or local partners like private entrepreneurs/investors

As described above, SGCT can make an equity contribution and become a long or short term shareholder

INVESTING

The other way is by partnering with an investor who brings in significant financial funds and holds a major equity position in the company. This can be of temporary nature for just financial reasons (e.g for a later sell out) or by a strategic investor like a major customer/application company for the product.