Project Almarai

Location:

Regional

Project number:

51068

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

B

Target board date:

30 Oct 2019

Status:

Board Approved

PSD disclosed:

26 Sep 2019

Translated version of this PSD: Arabic

Project Description

Provision of a long-term loan of up to USD 100 million, in SAR equivalent (the "Loan"), to Almarai Company (the "Company" or "Almarai"), a leading dairy and juice producer in Saudi Arabia. The Company is incorporated in Saudi Arabia and listed on the Saudi stock exchange. Proceeds from the Loan will be contributed to Beyti and Teeba, the Company's dairy and juice subsidiaries in Egypt and Jordan, respectively (the "Beneficiaries").

Project Objectives

Proceeds from the Loan will be used as follows: (i) up to USD 90m equivalent earmarked for Beyti to fund its dairy and juice production capacity expansion and growing working capital needs; and (ii) up to USD 10m earmarked for Teeba, to strengthen its capital base and fund its permanent working capital needs.

Transition Impact

The transition impact of the Project is expected to derive from its contribution to the Competitive and Integrated qualities, namely through the following:

  • Strengthening backward linkages to local farmers with an increase in the number of partner farms in Egypt that will comply with Beyti's strict procurement rules and the transfer of know-how to existing local farmers in Jordan.
  • Supporting the expansion of Beyti's exports to foreign markets and favouring FDI inflows in both the Egyptian and Jordanian dairy and juice sectors.

Client Information

ALMARAI COMPANY PJSC

Borrower: Almarai Company ("Almarai"), a company incorporated in Saudi Arabia and listed on the Saudi Stock Exchange.

Beneficiaries: (i) International Company for Agricultural Industries Projects Beyti, a company incorporated in Egypt ("Beyti"); and (ii) Teeba Investments for Developed Food Processing ("Teeba"), a company  in incorporated Jordan. Both Beyti and Teeba are majority owned and controlled by Almarai via a 52% stake while the remaining 48% are held by Pepsico Inc ("Pepsico").

EBRD Finance Summary

USD  100,000,000

 A loan of up to USD 100,000,000 in SAR equivalent.

Total Project Cost

USD  100,000,000

Environmental and Social Summary

Categorised B (ESP 2014). The Environmental and Social risks associated with the Project are site specific and readily addressed through standard mitigation measures. Beyti is an existing Client of the Bank, and has been satisfactorily reporting on E&S matters which demonstrate very good E&S performance and compliance with the previously agreed ESAP. Due to time constraints, only preliminary E&S Due Diligence was performed on the Teeba facility via the review of a completed questionnaire and a follow-up discussion with selected representatives from the Jordanian facility. In this context, and because further ESDD has been deemed necessary to fully assess the Teeba facility, ESD has requested that disbursement by Almarai to Teeba is condition to the completion of a full-fledged ESDD undertaken by the EBRD; as well as the Client's agreement of an updated ESAP.

ESDD on Almarai and IDJ Beyti confirmed that they operate to international standards, demonstrated by a number of certifications in place, including ISO 9001 for quality management, ISO 22 000 for food safety, ISO 14001 for environmental management and OHSAS 18001 for health and safety management. These systems are accompanied by appropriate policies and procedures and specialised staff in place at the Company to oversee the implementation of the systems.

Beyti and Almarai set animal welfare and environmental standards that farms which are supplying milk are required to meet. An audit process is used to assess farms before they can supply milk to the company, and all suppliers are regularly audited for quality, environment, social and health and safety aspects. PepsiCo Global Supplier Code of Conduct is used by Beyti in selecting and auditing its suppliers. A veterinary physician is required to be present at each farm. The Company's facilities are not a source of potential hazard to any neighbouring communities. The Company has a communication department that manages the different stakeholder engagement activities.

Specific ESDD on Teeba is outstanding, and will be undertaken prior to any disbursement decision by Almarai to Teeba using EBRD funds.

Technical Cooperation

Through Technical Cooperation ("TC") funds, and post signing of the Loan, a focused diagnostic study of milk producers, processors, and intermediaries in Jordan is planned, in an effort to highlight best practices and potential improvements in the raw milk supply chain in the country. The study will aim at identifying the bottlenecks in the sector which for the case of Jordan has been suffering recently from low prices driven by excess supply, low yields, and quality and traceability issues. The study will also aim at developing some recommendations to overcome the current issues in the sector. The study will closely involve local farmers and dairy processors. 

Company Contact Information

Imtiyaz Shaikh
Imtiyaz.Shaikh3@almarai.com
+966115286466
+966115286466
https://www.almarai.com/en/
P. O. Box 8524, Riyadh 11492 Saudi Arabia

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