Standard Bank, Africa’s largest bank by assets, has helped provide a $300m dual-currency revolving credit facility for avocado producer Westfalia Fruit International.
The Westfalia group operates estates across Southern Africa as well as Chile, Colombia, Peru, Portugal, the US and India, giving it the largest avocado-growing footprint in the world. It also grows a giant SA avocado variant dubbed the “Avozilla” along with other fresh fruit ranging from citrus to grapes and pomegranates as well as processed products such as dried fruit, avocado oil and guacamole.
Westfalia's “avozilla” weigh between 1.2kg and 1.7kg each, which compares to about 200g for a typical supermarket avocado. The “avozilla” is not genetically modified and stems from a feral tree that was discovered by a Westfalia farmer in the forests around Modjadjiskloof in Limpopo province.
The $300m funding package for Westfalia included contributions from the International Finance Corporation (IFC) and HSBC, who will help the fruit exporter expand its intercontinental growing footprint while also exploring new markets across the world. HSBC UK acted as mandated lead arranger and documentation coordinator while Standard Bank and the IFC acted as mandated lead arrangers.
Standard Bank, HSBC UK and the IFC each contributed about $100m to the dual-currency revolving credit facility.
“Standard Bank is Westfalia Fruit’s leading banking partner for its SA operations and we are pleased to grow our support for [the company’s] international business and become a key funding partner both locally and globally,” said Clive Potter, head of SA client coverage at Standard Bank’s corporate and investment banking unit. “The deal was relatively complex as it spanned across several jurisdictions which made this particular solution different to our rand denominated deals” Potter said.
Alk Brand, group CEO of Westfalia Fruit Group, which operates in 15 countries across five continents, said the funding package would help the company enhance its sustainable farming practices and create jobs and improve access to export markets. Westfalia also intends to upgrade its packing, ripening and storage facilities in Africa, South America and Europe to improve access to markets as the company intensifies its focus on ensuring sustainability across its production line as part of its strategy to become carbon neutral by 2030.
“Westfalia Fruit will continue to introduce climate-smart growing techniques that conserve energy and water and reduce pesticide use,” said Brand. “Westfalia Fruit will also use drought- and disease-resilient varieties to address the impact of climate change.”
SA is a major avocado exporter that ships its product primarily to Europe, the Middle East and other Southern African countries. Local producers are expected to export about 18-million cartons of avocados in 2023, an increase of 10.4% from the estimated 16.3-million exported the previous year, according to a February 23 report by Fruitnet.com.
“Developing sustainable avocado markets can help boost agricultural productivity to reduce poverty, especially in rural areas where people mainly work in farming,” said Adamou Labara, the SA country manager of the IFC, which is a member of the World Bank Group and is the largest global development institution focused on the private sector in emerging markets.
“This funding will help to meet rising demand and grow the global agriculture sector, providing new jobs across Africa, SA and India,” said Danny Goldblum, head of large corporate coverage at HSBC UK.
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