SA avo giant gets $300m boost from Standard Bank, HSBC and IFC

South African avocado producer Westfalia has received as much as $300 million (R5.4 billion) in funding from a consortium of financial institutions, which will enable the company to spread its intercontinental presence and explore new markets across the world.

The funders are made up of Standard Bank, which is also Westfalia’s leading banking partner for its South African operations, the UK’s HSBC and the International Finance Corporation (IFC).

Speaking on the deal, Clive Potter, who heads the client coverage for South Africa at Standard Bank, said the lender was pleased to grow its support for Westfalia’s international business and become a key funding partner both locally and globally.

He said the deal will adequately support Westfalia’s strategic ambitions as it would allow the business to retain its leading global avocado producer status while growing in markets with growth opportunities.

By value of trade, the global avocado market is estimated at $7 billion (R127.3 billion) and South Africa is a top exporter of avocados on the continent, mainly to Europe, the Middle East, and other southern African countries.

The county is expected to export around 18 million cartons of avocados in 2023, translating into an increase of nearly 2 million cartons, or 10%, compared to last year’s 16.3 million cartons.

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As part of the transaction, HSBC was appointed as the mandated lead arranger and documentation coordinator in respect of the deal itself, while Standard Bank and the IFC were awarded the title of mandated lead arranger, due to their respective participation in the dual-currency facility of $100 million (R1.8 billion) each.

“The deal was relatively complex as it spanned several jurisdictions which made this particular solution different to our rand-denominated deals,” Potter said.

Adamou Labara, South Africa country manager for the IFC, said as a development institution focused on the private sector in emerging markets, developing sustainable avocado markets can help boost agricultural productivity to reduce poverty, particularly in rural areas.

Westfalia’s presence, whose origins are in Limpopo, is already spread across 15 countries and five continents.

Alk Brand, CEO of Westfalia, said the partnership will boost its efforts to enhance its sustainable farming practices as well as create employment in the communities in which it operates.

It would also support economic growth by enabling Westfalia to continue to grow its business, strengthen value chains to sustainably produce and source quality avocados and improve access to export markets to meet the growing demand for the fruit,” Brand said.

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It plans to upgrade its packing, ripening and storage facilities in Africa, South America, and Europe to improve access to markets.

In addition, it will continue to 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. Westfalia Fruit will also use drought- and disease-resilient varieties to address the impact of climate change,” Brand said.