DEG, the investment arm of German state-owned development bank KFW, has extended a $10 million senior long-term loan to Vietnam-based animal feed producer Anova Feed JSC, as stated in a disclosure.
Separately, the German firm has also disclosed smaller fundings in Pakistani insurer TPL Insurance and the Cambodia-Laos-Myanmar Development Fund II.
The financing for Vietnam’s Annova Feed will be used by the company to strengthen its balance sheet structure by refinancing its short-term working capital. It is expected to help secure liquidity for Annova Feed at a time when the local banking system has been impacted by the coronavirus pandemic.
Founded in 2012, Anova Feed JSC has established itself as a small local player in a highly commoditised and cyclical market segment led by international producers.
According to DEG, the company, which has been a DEG customer since 2016, is an important provider of decent jobs in the region and the investment will secure and create up to 870 jobs.
“It contributes to recuperate the local market by supporting farmers rebuild their pig herds and providing a steady supply of animal feed. As all the employees are locals and 100% of the revenues remain in the country, Anova Feed JSC also contributes to a higher local income,” the firm said in the disclosure.
Meanwhile, DEG’s backing of Pakistan’s TPL amounts to a capital investment of $3 million, which will be used to expand the insurer’s underwriting and technological capabilities, as well as develop new markets and channels.
TPL, which is listed in the Pakistan Stock Exchange, claims to be Pakistan’s 6th largest general insurer, the 3rd largest Motor Insurer, and the only insurer in Pakistan that focuses on the retail market. DEG says it expects its engagement with the company to strengthen the reputation and credibility of TPL in insurance and capital markets.
It also plans to help the group to set up an environmental and social management system and facilitate the institutionalization of the company, especially in areas such as corporate governance.
Separately, DEG has also provided a top-up investment of $900,000 into the CLMDF II, a $63.4 million fund, focusing on Cambodia, Laos and Myanmar and managed by EMIA (Emerging Markets investment Advisers).
DEG says it expects the investment to have a significant impact in particular on strengthening the Fund, which was launched in 2015, and its investees.
The funding will support management of Covid-19 imposed challenges, including market impacts, supply chain impacts as well as cost increases. By providing additional liquidity to the Fund, DEG aims to support its investees through the crisis and execute growth plans post-crisis.
DEG has a 9 billion euro portfolio spread around 80 countries according to information on its website. About a third of the portfolio is in investments in Asia.