New issue of the Agri Resources Group: The ESG-compliant answer to the growing agricultural market in Africa

Regarding the bond: The offer for the 8.00% Sustainability Bond consists of a public exchange offer (including a multiple purchase option), a public offer and a private placement.

Please briefly introduce Agri Resources Group SA.

Frédéric Dalmasie: We specialize in the sustainable cultivation and processing of agricultural products in Africa and Europe. Our focus is on the cultivation of crops in Sub-Saharan Africa as well as on vanilla and spices in the regions of Madagascar and Mauritius, which are marketed to retail and commercial customers in Europe and Asia, for example. Our grown agricultural products range from import substitution crops to vanilla, spices and niche products.

You already issued a bond in 2016. Why did you now decide to issue another issue?

Frédéric Dalmasie: In 2016 we wanted to gain permanent access to the German capital market with our first bond. The funds at that time enabled us to further develop the company significantly, also towards an even more sustainable orientation, as well as a clear first leap in growth. In these five years, we have established ourselves as a reliable issuer and built up a stable investor base. That is why the decision for a second bond in order to raise our company to a new level was the logical consequence.

The qualification as a “Sustainability Bond” can be described as a special feature. What exactly is meant by this?

Frédéric Dalmasie: Sustainability shapes all of our business activities – and consequently also our financing, which we are adding a Sustainability Bond. Our new bond qualifies as a sustainability bond as defined by the International Capital Markets Association (ICMA). In a second party opinion, Vigeo Eiris, a subsidiary of Moody’s and the world market leader for ESG assessments, data, research, benchmarks and analyzes confirms that our sustainability bond framework is in line with the four core principles of the ICMA Green and Social Bond Principles.

In addition, Vigeo Eiris can assess the obligations of the issuer and the bond’s contribution to sustainability with “an appropriate level of security”, which corresponds to the highest level of security according to Vigeo Eiris‘ internal rating scale. The qualification as a Sustainability Bond underlines our commitment to the Social Development Goals of the United Nations, which is a fundamental part of our corporate strategy and a key success factor.

Investors in the existing 2016/2021 bond can swap and subscribe for the Sustainability Bond until March 5, 2021. New investors can place their buy orders from February 24th to March 10th, 2021. What are the conditions of the new bond?

Frédéric Dalmasie: Our sustainability bond offers an annual interest rate of 8% over a term of five years. As special protective rights for investors, the bond terms and conditions include, above all, a negative obligation, a distribution limit, a minimum equity ratio of 25%, a report on the progress of the project and the use of the proceeds from the issue, as well as a special right of termination for investors in the event of a change of control.

The target volume is up to 50 million euros. What should the funds be used for?

Frédéric Dalmasie: The proceeds from the bond will be used to finance and refinance a combination of pre-selected and audited green and social projects. Specifically, the focus of the Agri Resources Group is on the further expansion of its activities in Madagascar, Ghana, Mauritius and Benin. These activities mainly focus on three categories: advancing current sustainable agriculture, new projects for environmentally sustainable management of living natural resources and land use, and new projects for socio-economic progress and empowerment.

How has your company developed over the past few years?

Frédéric Dalmasie: We have successfully created and built substantial foundations and assets, consisting of 82,000 hectares of cultivation area and extensive processing and storage capacities. In addition, we have specifically expanded our international activities and created sustainable framework conditions in order to be successful in the long term.

For this purpose, we have, for example, carried out various audits and certifications, concluded long-term purchase contracts with international end customers and broadly diversified our product portfolio in terms of type, quality and origin. From an economic point of view, since the issue of our first bond, we have been able to increase our sales from EUR 5.8 million in 2016 to EUR 20.3 million in 2020 and have consistently grown profitably. During the same period, EBITDA improved from EUR 1.1 million to EUR 2.8 million and should continue to grow significantly.

What specific outlook can you give us?

Frédéric Dalmasie: We aim to achieve double-digit annual sales growth by 2024. Income is also expected to grow disproportionately. For example, we see the steadily increasing demand for staple foods in the African market and the growing demand for specialities in Europe as key growth drivers. Our company is already well-positioned to benefit from these drivers, for example through the cultivation of rice and soybeans in African countries such as Ghana or the Republic of the Congo or through the cultivation and processing of those certified by the United States Department of Agriculture (USDA) Organic vanilla in Mauritius.  

Thank you for the interview and good luck with your issue.