Blended finance facility to enable sustainable production at ACP

ACP Bioenergia began its journey over 33 years ago in Teodoro Sampaio, São Paulo, with 100 hectares of sugarcane. Today the company proudly cultivates over 78,000 hectares of sugarcane (and grains), showcasing remarkable growth and success. They establish this growth by working in close collaboration with pre-identified sugarcane mills within their catchment area to maximize sugar recovery and minimize losses. By supporting partner sugar mills through long-term lease contracts for farms, many of which are sub-leased via the mills, ACP ensures optimal utilization of production potential.

This symbiotic strategy has validated ACP's asset-light model, with over 99% of production occurring on leased lands. Expanding its horizons, ACP operates in 9 different hubs across the country, acting as a key supplier to multiple sugarcane mills. Additionally, ACP has diversified its agricultural activities beyond sugarcane, now cultivating 27,000 hectares of grains.

ACP Bioenergia emphasizes the need for sustainable practices and innovation in its operations, aiming to be a reference in performance and quality in the regions they operate. ACP already has a production of over 78,000 ha under sustainable agriculture management and produces ~100,000 litres/annum of biological inputs produced in the self-operated bio-factories. Riding on the success of execution and potential to optimally maximize production in the catchment area, ACP has identified a few opportunities*, including:

To realize above mentioned opportunities, ACP sought a longer-term financing of BRL 100mn (~USD 20mn) to spread the repayments over to limit pressure on existing revenue streams. Generally, such long tenor loans are quite rare in the market but are essential to achieve agricultural transitions. The Blended Finance team of Rabo Partnerships (a subsidiary of Rabobank) is familiar with these kinds of challenges. Together with their valued partner – Agri3 Fund– an agriculture-focused impact fund, Blended Finance supported Rabobank Brazil to structure a 10-year term facility to match the project requirements. In line with its growth ambitions and the associated E&S responsibilities, ACP has agreed to deliver on pre-identified KPIs as a part of the financing structure. The KPIs are further aligned with Agri3’s impact objectives** related to sustainable agriculture, forest protection and improvement of rural livelihoods. Moreover, with the support of AGRI3, ACP has agreed to undertake an on-farm GHG emission assessment and if required, will develop an emission reduction plan.

Andre Arca, Senior Relationship Manager, Rabobank Brazil, has been the key person instrumental in structuring the transaction for ACP Bioenergia in collaboration with Agri3 Fund. In his words, "The financing reinforces Rabobank Brazil's commitment to the sustainable development of agribusiness by promoting more efficient use of resources and encouraging the adoption of regenerative agricultural practices, contributing to greater environmental and economic resilience of production systems.”

Agnes Johan, Head of Blended Finance at Rabo Partnerships is extremely satisfied with the conclusion of this project, thanks to the strong collaboration between Rabobank Brazil, AGRI3 and her Blended Finance team. She states that “this is our first project in sugarcane value chain, a sector which is vulnerable to climate change and therefore, integration of sustainable practices is key. We hope that this project will be a new milestone in ACP’s sustainability-led growth journey and will prove to be a model for other like-minded organisations to adopt.”

* based, among other, on ACPs ambitions and external E&S due diligence recommendations

** Source: https://agri3.com/wp-content/uploads/2023/11/AGRI3-ESG-Policy-Statement-V1.0.pdf)