On July 1st 2020, NpM and IDH organized a session on the recently launched IDH Farmfit Fund. The key features of the fund were presented, such as de-risking instruments, facilitating debt investments in emerging market Smallholder Farmer value chains. The knowledge exchange provided an opportunity for NpM members to share their own previous and current experiences of investing in Smallholder Farmer value chains.
Roel Messie, CEO of IDH Investment Management, and Dominic Strano (Senior Investment Manager), presented the IDH Farmfit Fund, highlighting that the fund was launched to support Smallholder Farmers in several commodity categories, across different geographies. By investing in these value chains, and offering de-risking instruments, IDH Farmfit Fund aims to catalyse more investments into this -currently underserved – asset class. In 2020, several transactions are in the pipeline already.
Various NpM members participated in this partially physical session, such as: Oikocredit, Cordaid Investment Management, FMO, Actiam, Triodos Investment Management, ICCO, Triple jump and NpM partner The Netherlands Space Office (NSO), part of RVO. The discussions demonstrated high levels of interest in IDH Farmfit Fund’s innovative approach to de-risk and unlock investments in sustainable agri value chains.
Session Takeaways:
- IDH Farmfit Fund was initially set up in co-operation with the Dutch government and with contributions by four anchor investors (Unilever, JDE, Rabobank, Mondelez International) and IDH is looking to expand the group of investors.
- Demonstrating the viability of emerging market Smallholder Farmers debt transactions is the major goal of IDH Farmfit Fund.
- The key de-risking instrument provided by the IDH Farmfit Fund is the first loss guarantee provided. Senior lenders may also benefit from 2nd loss protection from the US Government (USAID) covering up to 50% of the principal.
- The IDH Farmfit Fund is a EUR100mln de-risking blended finance fund, with as target to build a portfolio worth over EUR 1 bln. The Fund has a life span of 10 (investment) + 5 (divestment) years.
- IDH, next to providing loans or guarantees through Farmfit Fund, aims to provide other services, such as market linkage and training to their Smallholder Farmer counterparts. The fund is an integrated part of the proposition that also consists of Farmfit Business Support and Farmfit Intelligence.
- Target area of the fund is 50% Africa and the other 50% is divided between Asia and Latin America. Fund contribution will be max. 30% for least developed countries and max. 50% in Fintech/Agtech.
- The IDH Farmfit Fund offers debt transactions, with ticket sizes between USD700K – USD5M. The preferred currency is USD or EUR, local currency up to 20% is possible.
- The IDH Farmfit Fund evaluates debt opportunities for emerging market Smallholder Farmer propositions which in essence are commercially viable, and there is willingness by IDH Farmfit Fund to investigate new or existing business models meeting that criterium. In that sense, the fund is flexible and may be able to do more than other investors could do on their own.
IDH Investment Management and NpM presented their work during the session. Their presentations and studies are listed below are available for download.
A big thank you to everyone for a fruitful session and active participation!
Click here for presentation IDH Farmfit Fund
Click here for presentation NpM
