Islamabad, Pakistan, February 3, 2017
—IFC, a member of the World Bank Group, is providing a $145 million financing package to FrieslandCampina, one of the largest dairy producers in the world, in an effort to spur the development of Pakistan's crucial dairy industry.
The financing will help the company acquire 51 percent of Engro Foods, Pakistan’s leading dairy processor. FrieslandCampina will share its global experience and international best practices with the small-hold farmers who supply Engro Foods and most dairy processors in Pakistan, helping them to boost productivity and cut down on waste. More than 200,000 farmers and 270,000 distributors are expected to benefit from the company's acquisition of Engro Foods, which will also create more than 1,000 new jobs in the dairy supply chain.
The financing package for FrieslandCampina includes equity investments of $45 million and senior loan of $100 million. Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden, the Dutch development bank, will also provide up to $45 million to support the acquisition.
“Pakistan is a key emerging market and is backed by one of the world’s largest and fastest-growing middle classes,” said Roelof Joosten, CEO Royal FrieslandCampina. “Together with Engro Foods, FrieslandCampina can contribute to food security, the more sustainable production of dairy, and raising living standards for Pakistani dairy farmers. I am convinced that this partnership will create long-term value for everyone.”
Engro Foods is part of Engro Corporation, one of the largest industrial conglomerates in Pakistan. It has a diversified business portfolio that includes operations in fertilizers, foods, petrochemicals and energy. Since 1991, IFC supported the group’s operations with around $200 million in investments.
“The success of Engro Foods demonstrates the potential of private businesses to transform industries,” said Mouayed Makhlouf, IFC Regional Director for the Middle East and North Africa. “At the same time, this financing package should underline for foreign investors the potential of Pakistan's private sector, which is growing quickly and is full of opportunities.”
Pakistan is the third-largest milk consumer in the world and its dairy industry produces 38 billion liters of milk annually. The acquisition will help improve food safety standards as supply chains improve productivity.
The financing package is part of IFC’s broader strategy in Pakistan to support local producers, drive inclusive growth, and create jobs. In the fiscal year 2016, IFC committed $117 million in long-term financing to Pakistan, including $52.5 million in mobilization. IFC’s current committed portfolio in the country exceeds $1.3 billion. IFC's investment and advisory work is part of the World Bank Group’s Country Partnership Strategy that aims to support farmers and small business owners in sectors with the potential to create jobs and combat poverty.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with 2,000 businesses worldwide, we use our six decades of experience to create opportunity where it’s needed most. In FY16, our long-term investments in developing countries rose to nearly $19 billion, leveraging our capital, expertise and influence to help the private sector end extreme poverty and boost shared prosperity. For more information, visit
www.ifc.org
About FrieslandCampina
Every day Royal FrieslandCampina provides millions of consumers all over the world with food that is rich in valuable nutrients from milk. With annual revenues of 11.3 billion euro, FrieslandCampina is one of the world’s largest dairy companies. FrieslandCampina produces and sells consumer products, such as dairy-based beverages, infant nutrition, cheese and desserts, in many European countries as well as in Asia and in Africa through its own subsidiaries. Dairy products are also exported worldwide from the Netherlands. Additionally, products are supplied to professional customers, including cream and butter products to bakeries and catering companies in Western Europe. FrieslandCampina sells ingredients and semi-finished products to manufacturers of infant nutrition, the food industry and the pharmaceutical sector around the world. FrieslandCampina has offices in 32 countries and employs over 22,000 people. FrieslandCampina's products find their ways to over a hundred countries. The company's central office is based in Amersfoort.
About Engro Foods
Engro Foods Ltd. was launched in 2004 as a fully-owned subsidiary of Engro Corporation Limited, one of Pakistan’s largest conglomerates. Engro Foods manufactures, processes, and sells dairy products, juices, ice cream, and frozen desserts. Since the company’s core business is dairy, procuring milk is one of its most important activities. Through Engro Foods’ milk collection network being present right at their doorstep, coupled with on-farm training and technical guidance on farming and milk production, Engro Foods is helping improve the livelihoods of hundreds of thousands of people. More recently, the company has also entered into the international market. Its first venture has been to acquire a halal foods business, Al Safa Halal, Inc. (Al- Safa) in North America.
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