Africa Agriculture and Trade Investment Fund2012

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Mission and Objectives of the AfricaAgriculture and Trade Investment Fund (AATIF)

Objectives

Mission

The Fund's mission is to realize the potential of Africa's agricultural production, manufacturing, service provision and trade for the benefit of the poor. The Fund aims to provide additional employment and income to farmers, entrepreneurs and labourers alike. Increasing productivity, production, and local value addition by investing in efficient value chains and providing knowledge transfer are paramount. In this context a dedicated effort will also be made to support contract farming arrangements.

Environmental objectives

Ecological sustainability

Reduction of agricultural carbon footprint

Social development objectives

Create employment

Increase household income

Reduce poverty

Economic development objectives

Enhance local value addition capacity

Bridge the funding gap

Increase agricultural production

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AATIF's pursuit of its social and environmental objectives

Land Acquisition and Involuntary Resettlement No funding of projects involving involuntary resettlement

Labor and Working Conditions Protection of basic rights for workers and prevention of child labour.

Community Health, Safety and Security

Minimizing risks and impacts to community health, safety and security that may arise from investment activities (e.g. equipment accidents ).

Biodiversity Conservation and Sustainable Natural Resource

Protecting and conserving biodiversity—the variety of life in all its forms, including genetic, species and ecosystem diversity—and its ability to change and evolve

Indigenous PeoplesAvoiding and minimizing the risk of exposing indigenous people to severity of impacts, including loss of identity, culture, and natural resource-based livelihoods, as well as exposure to impoverishment and disease.

Cultural Heritage Safekeeping of irreplaceable cultural heritage and guidance for investees on protecting cultural heritage in the course of their business operations.

Pollution and AbatementMonitoring and diminishing the amount of pollution to air, water and land that may threaten people and the environment caused by an investment

Each of the Funds investees has to follow the AATIF Social and Environmental Objectives which span seven categories including social as well as environmental aspects for the benefit of affected communities and to preserve the environment.

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Structure of the Fund

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Fund structure

Senior Tranche(A-Shares)

MezzanineTranche

(B-Shares)

Junior Tranche

(C-Shares)

Sponsor(s)

Institutional Investors,Ultra High Net Worth

Individuals Foundations

(Potential) Investors

Produceagainst

payment

Issuer Vehicle

Luxembourg

Certification, Impact Studies

Other public and private

investors

Local Financial Institution

Direct Equity & Debt

Senior loansRisk SharingGuarantees

Loans

Investment Committee

Intermediary

Senior loansRisk SharingGuarantees

Loans (in

kind)

Insuranceweather,

yield

Investments

Structure

Investors

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3 The AATIF is structured to allow investors to come in at three different levels, each offering a unique risk/return profile with dividends being paid following a waterfall principle.

The Fund targets small, medium and large scale agricultural farms as well as agricultural businesses along the entire agricultural value chain which will be financed directly (e.g. cooperatives, commercial farms, processing companies) and indirectly via local financial institutions or other intermediaries (such as large agribusinesses) which on-lend to the agricultural sector.

The AATIF is organised under Luxembourg law in the form of a public limited liability company. The Fund’s Shareholders are represented by the Board of Directors. The Board of Directors appoints the Investment Committee which approves investments (discretion) that are proposed by the Investment Manager and supervises the activities of the Investment Manager.

Board of Directors

General Meeting of Shareholders

Governing bodies

The Investment Committee is appointed by the Board of Directors. The Investment Committee supervises the management of the Investment Manager within the parameters set by the Fund‘s guidelines as well as votes on every transaction suggested by the Investment Manager for investment. Current members:–Thomas Duve (Director Africa Regional Programmes, KfW)–Karl Weinfurtner (Director Africa Department, DEG )–Juergen Blanken (Independent agricultural consultant)

InvestmentCommittee

The Investment Manager (Deutsche Bank AG) is appointed by the Board for the management of the Fund on behalf of the Board of Directors. Duties of the Investment Manager encompass among others the identification, evaluation, negotiation and structuring of investment opportunities consistent with the Fund‘s guidelines.

Investment Manager

The shareholders act through a General Meeting and have the ultimate power to materially amend the prospectus and other governing documents. They elect the Board of Directors.

Shareholders

To assess an Investments’ compliance with the Fund's social & environmental guidelines, the Fund partners with an independent Compliance Advisor. The Compliance Advisor shall provide an opinion to the Investment Manager and the Investment Committee on whether a proposed investment is in compliance with the Fund’s development policy as well as its socials & environmental guidelines.

Compliance Advisor

The Board of Directors has exclusive power to administer and manage the Fund as well as the obligation to keep the shareholders of the Fund informed on business developmentsCurrent members: –Thomas Duve (Chairman AATIF, Director Africa Regional Programmes, KfW) –Doris Koehn (Director General for Africa and the Middle East, KfW)–Bernd Balkenhol (former Director of the Social Finance Program of the ILO, a UN Agency ) –Jyrki Koskelo (former IFC Vice President, World Bank Group)

Board of Directors

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Investments of the Fund

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AATIF targeting the agricultural value chain

Input

Create access to Domestic marketsExport markets

Processing SaleFarming

Support and Funding of e.g.Quality seedsAgrochemicals (fertilizer, crop protection)Irrigation systemsAnimal Feeds

Support through technical assistance e.g.Farming techniquesApplication of inputs, such as fertilizer, crop protection

Funding of e.g.Storage facilitiesProcessing facilities, such as milling, ginneries, other machinery & equipment

Technical Assistance Third party support (e.g. training, etc)Provision of Funding Provision of Insurance

Enhancing the agricultural value chain

Financial Support Technical Support

AATIF is established to invest along the agriculture value chain for a dynamic local business growth. Such investments will be targeted at each of the agricultural value chain linkages including but not limited to input provision, farming, processing and the off-take market (sale)

AATIF will on a case by case basis cooperate with weather and yield insurance providers and stipulate such additional services if necessary and economically feasible

Alongside the funding of eligible projects, AATIF can assist project owners through the provision of technical assistance, for example by providing grants for training measures with respect to agricultural and management skills

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Advantages of the AATIF investments

Fast and flexible financingProfessional investment manager, decision making process from due diligence until financial close no longer than 8 weeks to 6 months; Multiple draw downs, forward commitments , etc. – AATIF can provide its capital in a very flexible manner

All financing instrumentsAATIF can provide all types of financing, i.e. senior debt, mezzanine and equity; the Fund can also operate as the sole investor in projects (single investor transactions) to simplify implementation and lower execution costs

Long maturities

TA facility

AATIF’s Technical Assistance (TA) facility is established to support (1) training of best practices farming techniques, financial and accounting skills, (2) improvements to the social infrastructure (health care, schools) and (3) scientific studies or trials for example with respect to social impact or climate change effects

Market access (off-take market) AATIF closely cooperates with off-takers of African agricultural produce; AATIF may facilitate access to such off-takers (for its clients)

Market access (local FIs) AATIF closely cooperates with local financial institutions (FI) and may link the project owner to a local FI to discuss additional financial services, such as cash + deposit management and insurance products & account services for workers

Flexible with respect to maturities: Debt can be provided for maturities of up to 12 years; Equity or mezzanine capital can be provided to act as co-sponsor or long-term subordinated risk taker

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Case Study ZambiaAATIF direct investment in a Zambian wheat, maize, soy farm

Project in brief

Project structure Investment characteristics

Project: Direct funding of a wheat, soy and maize farm

Country: ZambiaFunding: Farm expansion and development financing (incl.

acquisition of brown field farms and procurement ofirrigation equipment)

Benefits: 1. Enhancement of crop quality and yield per hectare

2. Amelioration of food security in Zambia and

neighbouring countries such as DRC

(export permit in place)

Local impact: 1. Improvement of local employment situation

2. Fostering an employment scheme

promoting the

development of workers (from lower to higher skilled labour)

3. Training programme for neighbouring

smallholders

4. Improving housing conditions of workers +

malaria protection

5. Enabling school access for farm childrenKey elements: Volume: USD 10m Term: 5 years Semi-annual interest payments based on USD Libor

Additionality: Currently limited access to longer term funding on the local funding

market, especially to acquisition financing (farm expansion) AATIF provides funding and thereby opens avenue to further capital

(private investors, local financial institutions)

AATIF

Zambian Farm

Loan Debt service

Private Investors

Equity

Due diligence on social and environmental guidelines

Political risk coverage

Off

-ta

ker

Compliance Advisor

MIGA

Agricultural produce

Cash

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Case Study GhanaAATIF direct investment in GADCO a Ghanaian rice farm

Project in brief Integrated value chain delivering income for the farm and neighbouring smallholders

Investment characteristics

Project: Direct funding of a rice farm (incl. processing equipment)

Country: GhanaFunding: Farm expansion and development financing (incl.

procurement of a rice mill and agricultural equipment)

Benefits: 1. Reducing Ghana’s dependence on food crop imports

2. Improving total rice output by enhancing quality and

quantity of milled rice

Local impact: 1. Roll-out of a smallholder scheme targeting to impact up

to 15.000 smallholders

2. Job creation incl. higher skilled labour

3. Fostering an employment scheme

promoting the

development of workers (from lower to higher skilled

labour)

Key elements: Volume: USD 5m Term: 5 years Semi-annual interest payments based on USD Libor

Additionality: Currently limited access to longer term funding, especially to acquisition

financing (farm and value chain expansion) AATIF provides early stage funding, thereby delivering positive signal

for further capital raising (private investors, local financial institutions)

Cro

p:

Ric

e

Smallholder program

Nucleus farm

Centralised Production Services

Production Programs Grain Logistics & Processing

• Mechanization services

• Land Rollout Planning

• Global and regional Technical Partnerships

• Technical services (diseases, soil, topography etc.)

• Yield management (inc. cultivar trials and IP management)

• Input procurement

• Sustainable farming, strong stewardship

GADCO Nucleus Farms

Logistics

Crop processing

Transport

Weigh-bridges

Elevators / Storage

Sorting / Cleaning / De-husking

Grading

Milling

Crushing / Grinding

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Contacts

Africa Agriculture and Trade Investment Fund

Dr. Thomas DuveThomas.Duve@kfw.de

Michael SchneiderMichael-d.schneider@db.com

© Copyright 2012. Africa Agriculture and Trade Investment Fund, 31 Z.A. Bourmicht, L-8070 Bertrange, Luxembourg. All rights reserved.

This presentation (the ‘Document’) has been prepared by the Africa Agriculture and Trade Investment Fund exclusively for the benefit and internal use of the potential client (‘Client’) in order to indicate, on a preliminary basis, the feasibility of a possible transaction or transactions. The Document may only be used for these purposes. The Client is not permitted to duplicate the information provided in this Document and to communicate the received information of this Document to any third party without the prior written consent of the Africa Agriculture and Trade Investment Fund.

The Document is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by the Africa Agriculture and Trade Investment Fund. The Document is neither intended to serve as legal or tax advice nor should it replace it.The information in the Document reflects prevailing conditions and the Africa Agriculture and Trade Investment Fund’s views as of this date, all of which are subject to change. Neither the Africa Agriculture and Trade Investment Fund nor their directors, officers, agents or employees, customers or professional advisers make any representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness or reasonableness of the Document. The aforementioned persons will be under no duty to provide access to any additional information or to update or correct (if required) any Information. Accordingly, neither the Africa Agriculture and Trade Investment Fund nor the aforementioned persons will be liable for the accuracy, reliability, completeness or reasonableness of the Document.