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.'

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