IDB provides $3.5M to Chilean AgroDesarrollo fund

Microfinance Focus, Dec. 2, 2009: The Inter-American Development Bank’s Multilateral Investment Fund (MIF) will make an equity investment of up to $3.5 million in AgroDesarrollo, a fund that backs agribusiness entrepreneurs in rural Chile.

MIF is an autonomous fund administered by the IDB that promotes the development of microenterprises and small and medium-size businesses in Latin America and the Caribbean, providing access to various forms of financing and knowledge networks.

AgroDesarrollo has obtained a credit line of up to $21 million from CORFO, the Chilean development agency. The CORFO credit line will leverage AgroDesarrollo’s equity commitments, allowing the fund to grow to $28 million if it raises $7 million in equity.  Other investors include Chilean companies and individuals.

The fund will be managed by Sembrador, a Chilean venture capital fund management company investing in agribusinesses. Sembrador was established in 2005 as a joint venture among partners that include Subsole, one of Chile’s largest exporters of fresh fruit, and Activa, the private equity branch of Larraín Vial, Chile’s leader in non-banking financial services. Sembrador’s other agribusiness fund, FICA I, is fully invested.

AgroDesarrollo will provide financing to between nine and 14 entrepreneurs developing agribusiness companies in rural areas of Chile, where these companies could create as many as 2,600 jobs. The fund will invest only in projects that will develop innovative products (such as varieties not currently grown in Chile) or original processes to improve the quality and efficiency of production. To be eligible for support from the fund, companies must have fewer than 100 employees and sales under $5 million a year.

The new project benefitted from the MIF’s cooperation with CORFO and experiences investing in venture capital funds in Latin America and the Caribbean.

“AgroDesarrollo will contribute to slowing migration from rural areas to cities in Chile, helping create jobs and foster economic development in rural areas of the country. The fund’s combination of expertise in finance and agribusiness makes for an effective model that can be replicated by venture capital funds elsewhere in Latin America and the Caribbean,” said MIF project team leader Susana Garcia-Robles.

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