USAID Facilitates $14m Investment by Mirova’s Land Degradation Neutrality Fund in Kennemer Foods International
June 6, 2022 (BANGKOK) – The Land Degradation Neutrality Fund, managed by Mirova, recently announced a $14m investment into Kennemer Foods International to support its sustainable cocoa production in the Philippines. The United States Agency for International Development (USAID) Green Invest Asia project facilitated the transaction with environmental and social due diligence, financial and carbon accounting advisory support.
“We like the holistic approach developed by Kennemer in breaking the cycle of poverty affecting many smallholders, implementing profitable nature based solutions that also benefits the environment,” said Nicolas Hayon, Investment Director and Head of Mirova’s division in Singapore.
Kennemer operates a cacao contract outgrower (i.e., farmers agree to supply a buyer, in return for guaranteed pricing or other support) program. Kennemer provides smallholder farmers high-quality planting material and other inputs, technology and training in good cacao farming practices, post-harvest assistance, guaranteed buy-back of the harvest at prices linked to the world price, and facilitation of access to financing. Kennemer established a subsidiary financial institution, Agronomika, to facilitate farmers’ access to finance, and another subsidiary, Kennemer Eco-Solutions , to launch a carbon fund that incentivizes forest protection and restoration in cacao agroforestry landscapes.
“This new investment from Mirova’s Land Degradation Neutrality Fund will support Kennemer‘s implementation of sustainable agroforestry practices in the cocoa and fruit sectors in the Philippines, in partnership with smallholders. It will allow Kennemer to grow and evolve its model by expanding its small-scale producer programme, implementing agricultural initiatives that will serve as a foundation for promoting regenerative agriculture practices, expanding micro-finance capabilities, and supporting the development of an ambitious carbon program,” said Nicolas Hayon from Mirova.
“This was not a straightforward investment to raise given Kennemer’s multiple subsidiaries,” said Simon Bakker, Kennemer Group CEO. “We are grateful for USAID Green Invest Asia’s steadfast support on multiple fronts. First, the financial advisory services enabled us to bring all companies under a holding structure. Second, the investor matchmaking and technical support services helped us to create a new subsidiary, which will provide a new income stream for us through the sale of carbon offsets. From cacao to the carbon market – it has been an interesting journey, and it’s one we have been able to make thanks to USAID Green Invest Asia’s support with this investment.”
USAID Green Invest Asia facilitated the latest investment from Mirova by providing Kennemer financial and technical advisory support to improve its investment-readiness. Services included capital matchmaking; financial modeling; an Environmental, Social and Governance (ESG) assessment to meet investor requirements; and a spatial analysis of deforestation in Mindanao to identify potential forest conservation and restoration sites.
“As part of the United States’ priority to reduce carbon emissions towards a more resilient, inclusive, and secure Southeast Asia, USAID is pleased to collaborate with private sector partners such as Kennemer who are committed, like we are, to environmental, social and governance considerations,” said Steven G. Olive, Ph.D., Mission Director of USAID’s Regional Development Mission for Asia. “The partnership is aligned with the USAID Climate Strategy framework, including mobilizing climate finance and catalyzing systemic changes toward resilience, low-emissions supply chains.”
Mirova is a management company dedicated to sustainable investment and an affiliate of Natixis Investment Managers. Mirova and its affiliates manage €27.2 ($28.7) billion as of March 31, 2022 including €467 ($493) million focused on nature-based solutions financing projects that combine profit with purpose – including ecosystem conservation, restoration and sustainable livelihoods for local communities- such as the Land Degradation Neutrality Fund.
Kennemer will use Mirova’s investment to expand its cultivation of sustainable cacao, bolster a smallholder finance program run through its subsidiary, Agronomika Finance Corporation, develop agroforestry and conservation programs, and achieve certification of removal/reduction of greenhouse gas that is required for the company to sell carbon credits.