'Meat'-ing across borders
pilot project was successful and early in
2005, it was decided to turn the project
into a fully operating division with long
term business goals.
Brazil presents enormous opportunities
for Rl. As well as being one of the world's
largest agricultural producers, Brazil's
farmers are poorly supported by the
established banks. The Brazilian market
potentially dwarfs that of any other
country in the world except the USA and
maybe Australia,' confirms Witherow. The
core product that Rabobank offers in Brazil
is a one-year seasonal erop input loan.
This reflects the much riskier lending
environment in Brazil. The type of
agriculture being financed also differs
from Chile, says Witherow. 'In Brazil, our
major exposure is to soy, corn and cotton
growers, but we are also starting to move
into sugar, coffee and beef cattle
industries.' Rabobank Brazil's farmer
financing programme finished the year
with ten offices in agricultural areas and
assets of over US$ 110 million, and in 2006
is expected to make a material contribution
to Rabobank Brazil's bottom line.
Rural lending provides relief from the
highly competitive corporate market and
an alternative avenue of potential
business growth for Rabobank's Latin
American operations. Witherow is
convinced that rural lending requires
flexibility and a willingness to think
'outside the box'. 'When you start a new
business like this, there's no instruction
book. You have to write the book as you
move forward.'
Cross-border cooperation between Rabobank offices in Latin America was
a major feature of a recent deal in which a leading Brazilian meatpacker,
Friboi Ltda., acquired a majority stake in Swift Armour SA, Argentina's largest
beef exporter.
Antonio Guedes, Senior Relationship Manager at Banco Rabobank
International Brazil was already working closely with the country's meat
industry leaders. So when Friboi looked into expanding its operations in
January 2005, Rabobank's Brazil office called its counterpart in Buenos Aires
for advice. 'Together with the teams in Brazil and New York, we put together a
presentation on the meat sector and defined the key players,' says Rafaei
Bonasso, Commercial and Corporate Finance Director Argentina. Swift
Armour's name quickly came up as a potential candidate for acquisition due
to their strategie fit.
Rabobank Buenos Aires already had a relationship with Swift and was familiar
with the company's shareholders. Swift had a strategie investor, Mr. Oliva
Funes, and two financial investors, JP Morgan Partners and Greenwich
Associates. 'We knew that Swift's financial investors wanted to leave the
company,' says Santiago Martignone, Relationship Manager at Rabobank
Buenos Aires, 'but Mr. Funes wanted a partner who was involved in the sector.'
Once Friboi was presented with this opportunity, three Rabobank branches
were involved in every aspect of the deal from origination through execution
to completion. Pedro Paul Teixeira, Maher Kafrune and Silvio Junqueira in
Brazil, and Alejandro Reynal in Argentina were involved in the due diligence
and valuation of the assets. Ignacio Kleiman and Alejandro Reca in New York
played a key role in the strategie discussion with Friboi and in the
negotiations with the sellers. The deal, which closed in approximately 90
days, was completed in September 2005, made Friboi the first Brazilian player
to internationalise its operations and changed the direction of the region's
meat industry.
'This isexactly the type of cross-border business we have been stressing in
Latin America,' said Guillermo Bilbao, Deputy Regional Manager Americas.
'We have worked hard at getting the offices to think as a region and share
their capabilities and clients better while building a unified product platform,
and it is paying off.'
The Word 9
