Agri-project finance team -
never a dull moment
3 International
ISSUE 31/25 JULY 1994
The current 13-strong team that pursues and develops agri-project
financing has a specialist brief. It is responsible for the analysis and
structuring of finance for international food and agri-projects. They may
still be small in number and scattered around the world, but real team
spirit and strong bank-wide organization and coordination are the keys
to this increasingly important activity.
>- Agri-project financing is a relatively new
though fast-growing activity for Rabobank. Set
up in 1988 as a two-person operation to look in-
to debt-equity conversion options to recover
loans to struggling developing economies, over the
past fewyears the original team and grown as its
business focus expanded. So much so that in the
last year staff has increased to 13 in four different
locations worldwide, and with more growth in
the pipeline. The team's name seems to say it all,
but what do Niek Streefkerk and his people con-
sider a project and how do they find them?
Project concept
'A project is usually an idea that may or may
not have been fully developed,' says Streefkerk,
'sometimes it is no more than a concept that
still has to be thought through, analyzed, set up,
organized and financed. So, often the security
for investment is not a parent company's bal-
ance sheet or guarantee, but the project's own
assets and projected cash flow on completion.'
Homework
For a bank, this description doesn't seem par-
ticularly inviting, especially as most agri-pro
jects are located in developing countries or in
the former command economies of Eastern
Europe and China. T'd agree that project fi
nancing can be a relatively risky business,'
Streefkerk confirms, 'but that's why we are de
veloping the team and building up experience
all the time. If you do your homework and are
involved with the right people, then the risks
are acceptable. But you can never afford to be
complacent.'
The team - all togetherfor their annual
meeting in Utrecht.
Geographic diversification
The team has grown so quickly mainly as a re
sponse to cliënt demand. In the early 1990s, it
became clear that many of Rabobank's core
clients were increasingly expanding their oper-
ations outside of traditional domestic markets
and into new geographic areas. 'What we were
seeing was the start of a global reallocation of
food and agri-production resources,' Streef
kerk says. 'There was a clear shift to the South
ern hemisphere and to the former command
economies. So we thought we should be in
there, too.'
Policy plan
Last year, the team produced a detailed policy
and business plan which argued that if the
bank's aim is to be the world's leading food
and agri-bank, then this is one product you
cannot get around, and it can also lead to op-
portunities for cross-selling. 'Once you are es-
tablished in our market,' says Ben Huiskamp of
the team's three-person Singapore cluster,
'clients see you're able to come up with creative
agri-project finance structures and have in-
depth knowledge of their particular product.
Then there's a real chance to bring in the bank's
other products. One of our major objectives is
to support colleagues as part of an integrated
approach.' To achieve this, the team has its core
unit in Utrecht, with integrated clusters in
other parts of the world with large market
potential.
Specialized business
Although the team is heavily involved in feasi-
bility studies for clients, their main activity re-
mains finding suitable financing opportunities.
'Agri-project finance is a specialized business,'
says Streefkerk. 'There are banks that do it lo-
cally or nationally, but Rabobank is the only
commercial bank operating on a global scale.'
Not surprisingly, the feasibility of potential
projects is top priority for the team. In most
cases, they are approached with a proposition
through usual acquisition channels, ie. account
managers, or by an international organization,
such as the IFC or EBRD, with whom they
work very closely. But as the team's reputation
grows, non-Rabobank clients are increasingly
finding their way to APFT's door - also because
the team acts as EU subsidy intermediaries for
developing and Eastern European countries. If
a project looks interesting, the team will then
examine it closely, often with the assistance of
external experts, and analyze its potential,
before making recommendations to clients or
the Credit Comittee.
Joint-venture structure
'The structure of a project would usually be a
local joint-venture partner matched with a
'foreign' sponsor who is both financially sound
and has the necessary expertise in production,
management, marketing and so on. We're
bankers, not operators, so we need to be sure
that strong and experienced parties sponsor the
project.'
Multinational
Although Streefkerk describes his team as
'bankers', this is to something of a misnomer
as the multinational APFT is composed of
people who do not necessarily have pure bank
ing backgrounds, but who have financial
experience gained in food and agribusiness
sectors. 'Patrick Guyver in Singapore was a
consultant with the FAO in Rome,' Streefkerk
explains, 'Roger Bradshaw in Hong Kong
worked in the sugar industry, while Gordon
Butland in Rio de Janeiro is an expert in poul-
try, pigs and soft drinks.' Given its varied
expertise, theoretically the know-how of some-
one based in South America can be used by
colleagues in South-east Asia, and vice versa.
This is what makes Rabobank an expert bank.
Old values - new techniques
'Because of the nature of our work, no two pro
jects are ever the same,' says Streefkerk, 'they are
all tailor-made packages. Our job is fascinating
because we operate in a lot of countries, each
with its own specific culture and political and
socio-economic situation. At the same time,
we're in at the start of something that can add
lasting value, not only for the bank, but also for
the local people concerned - especially in devel
oping countries. I'd say this reflects the old cor-
porate banking culture, spirit and affinity on
which Rabobank was founded. Today, our team
is a modern organization, but I think we've man-
aged to combine the old values with new tech
niques and knowledge and the flexibility de-
manded from a global operation to come up
with a leading-edge product. That's why we call
ourselves a 'team' - our APFT people are the
kind who have a natural inclination to support
and pitch in for other colleagues while conti-
nuing to operate as efficiënt individuals.'
