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5 Apr 2023

Standard Bank involved in USD300m funding to boost the expansion of sustainable avocado producer Westfalia Fruit International Limited alongside IFC and HSBC UK

Standard Bank, Africa’s largest bank by assets, is pleased to announce that it has participated in a third of Westfalia Fruit International Limited’s (Westfalia Fruit) USD300m dual-currency revolving credit facility. This funding, executed alongside the International Finance Corporation (IFC) and the UK-headquartered HSBC UK, will help the leading sustainable avocado producer further expand its intercontinental footprint whilst exploring new markets across the world.

“Standard Bank is Westfalia Fruit’s leading banking partner for its South African operations and we are pleased to grow our support for Westfalia Fruit’s international business and become a key funding partner both locally and globally,” says Clive Potter, Head: Client Coverage South Africa, Standard Bank. 

 HSBC UK was appointed as Mandated Lead Arranger and Documentation Coordinator in connection with the deal and the other lenders (Standard Bank and the IFC) were awarded the title of Mandated Lead Arranger due to their respective participation in the dual-currency facility (USD100m each). “The deal was relatively complex as it spanned across several jurisdictions which made this particular solution different to our ZAR denominated deals” Potter adds. 

According to Potter, this deal will adequately support Westfalia Fruit’s strategic ambitions by allowing the business to retain its leading global avocado producer status and grow in markets where there is opportunity for growth. 

Alk Brand, group chief executive officer of Westfalia Fruit Group, which operates in 15 countries across five continents and is the parent company of Westfalia Fruit, comments: “The partnership with Standard Bank, IFC and HSBC will contribute to our efforts to enhance sustainable farming practices, create jobs in the communities where we operate and support economic growth by enabling Westfalia Fruit 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.” 

In addition, Westfalia Fruit intends to upgrade its packing, ripening and storage facilities in Africa, South America, and Europe to improve access to markets and will continue to place due focus on ensuring sustainability across its production line. As part of its strategy to become carbon neutral by 2030, Brand explains that “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”.

The global avocado market is estimated at $7 billion by value of trade.  South Africa is a top exporter of avocados on the continent, shipping primarily to Europe, the Middle East and other southern African countries. It is forecast that SA will export around 18 million cartons of avocados this year, which represents an increase of nearly 2 million cartons, or almost 10%, on last year’s 16.3 million cartons. Domestic demand for the fruit has also increased in recent years with no indication of slowing down in the immediate future. 

“Developing sustainable avocado markets can help boost agricultural productivity to reduce poverty, especially in rural areas where people mainly work in farming. 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 – is pleased, therefore, that its investment in Westfalia Fruit will help increase avocado production to meet growing demand, strengthen global value chains and boost economic growth in developing countries,” said Adamou Labara, IFC country manager for South Africa.

Danny Goldblum, Head of Large Corporate Coverage at HSBC UK, added: “We’re pleased to have delivered a bespoke solution to meet Westfalia Fruit’s specific requirements demonstrating our strong capabilities to lead and coordinate across different teams. The global fresh fruit market is expected to grow by 5.53% annually, and this funding will help to meet rising demand and grow the global agriculture sector, providing new jobs across Africa, South America and India. We also look forward to seeing the business continue its sustainability efforts and meet its net zero targets in 2030.”