Bank Hapoalim Leads Financing Deal for the Ethiopian Sugar Corp. as part of Netafim’s™ $200M. Innovative Irrigation Project
TEL AVIV, March 6, 2016 – The Business Division of Bank Hapoalim, headed by Jacob Orbach, led a comprehensive financing agreement of over $200 million for the Ethiopian Sugar Corporation for a large-scale sugarcane irrigation project to be carried out by Netafim. The project covers 7,000 hectares (70,000 dunams).
The financing is a buyer’s credit arrangement in which the participating banks will grant a loan to the corporation that will be fully guaranteed by the Ethiopian government. The financing will be released one part at a time based on the achievement of project milestones, and payments will be transferred directly to Netafim in exchange for export. The Ethiopian Sugar Corporation will pay off the loan over a relatively long period of 9.5 years while the payback risk will be insured by a consortium of insurance firms that includes The Israel Foreign Trade Risks Insurance Corporation (Ashr’a) and international insurance firms with a high credit rating.
The financing solution via buyer’s credit enables Netafim to offer the sugar corporation comfortable financing terms, which helped complete the agreement while not being exposed to political and commercial credit risks. For Netafim, the deal is a cash transaction, while for the lending banks, the credit is being insured by quality insurers.
Netafim is the global leader in smart irrigation solutions for a sustainable future. With 28 subsidiaries, 17 manufacturing plants and 4,300 employees worldwide, Netafim delivers innovative so¬lutions to more than 110 countries across the globe. The company is headed by Ran Maidan and controlled by the European private equity fund Permira and Kibbutz Hatzerim.
According to the terms of the agreement, Netafim will exclusively supply an end-to-end solution from engineering planning, pumping and water transport infrastructure, and advanced irrigation and monitoring and control systems to agronomic and engineering services carried out by experts from Israel and abroad. The sugarcane will be irrigated by advanced subsurface technology that has been proved to significantly increase yields while delivering major savings in water and other resources. The project is expected to start immediately and will continue through 2017.
Bank Hapoalim’s Oren Cohen, Head of Structured Credit Products, Hanoch Spitzer, Manager of Foreign Trade Business, Yona Rosenberg and Yael Schissel led the agreement for the bank. The agreement’s financiers will be represented by attorney Cliff Davis and the S. Horowitz & Co. law firm.
“We’re proud that an exporter like Netafim is our customer, and are happy that we successfully completed the deal,” said Bank Hapoalim Business Division head Jacob Orbach. “Bank Hapoalim’s Business Division supports its clients through its know-how and experience in foreign trade financing over years. The fruitful cooperation with Ashr’a as well as the ability to bring in international insurance firms and additional local financing bodies to the deal leads to advanced solutions for Israeli exporters and testifies to the great importance the bank attributes to Israel’s industry, and particularly Israel’s exports.”
“This large multinational agricultural project is a strategically-important deal that strengthens our presence in Africa in general, and in Ethiopia in particular,” said Netafim CEO Ran Maidan. “Netafim was chosen to lead the project due to our advanced technology, as well as our proven ability to deliver advanced and large end-to-end complex projects, while closely accompanying customers through all project stages. Netafim will lead the project in partnership with Baran and Global Africa, which is led by Itai Terner. We thank Bank Hapoalim with whom we worked and who greatly helped us creating a comprehensive solution that enabled the existence of the project. We are sure that the project will be successful like similar projects in India, South Africa, Brazil and Peru.”
“This is one of the most complex projects that Ashr’a has insured in the last few years,” said Tzahi Malach, CEO of Ashr’a. “The project’s size obligates us to find a solution for spreading risk by using a large number of private subcontracting insurers that joined the insurance agreement. We are happy that such a large export deal has taken off. This project validates Ashr'a's objective, as a government company, to enable Israeli exporters to enjoy large projects throughout the world and contribute to the growth of the Israeli economy.”
“Recently, as part of the Treasury’s plan to encourage growth, the state’s guarantee agreements to exporters have been expanded to an unprecedented $3.5 billion,” said Yahali Rotenber, a senior assistant to the Accountant General and Manager of the Accountant General’s Financing and Credit Division. “We will continue to aid in implementing export agreements in the economy based on the Treasury’s and Accountant General’s policies.”