The facility, to enable Tan Long Group JSC (Tan Long Group)—a market leader in soft commodity trading—to diversify the procurement of agri-commodities, is part of IFC’s Global Warehouse Finance Programme (GWFP) that increases available financing to agricultural producers and traders in agricultural countries such as Vietnam.
Underpinning the deal is a 50:50 risk-sharing partnership between IFC and VPBank, with each participating in risk for up to $25 million on an unfunded basis covering half of every eligible transaction under the facility.
“Diversifying trade finance products will help realise VPBank’s strategy of becoming a leading SME bank over the next five years, with supporting local importers and exporters as a pillar,” said Dinh Van Nho, VPBank deputy chief executive officer cum head of Corporate Banking Division.
This partnership is expected to have a significant development impact on the animal protein value chain in Vietnam—an increasingly important sector in the country—as it will enable Tan Long Group to procure, store, and distribute raw materials more effectively and efficiently.
“It will not only help Tan Long Group to consolidate its position as a market leader in soft commodity trading through diversifying procurement of high-quality agri-commodities at lower costs, it will also increase the efficiency of other agribusiness value chain participants and Vietnam’s agribusiness sector in general,” said Nguyen Thi Thanh Van, deputy general director of Tan Long Group.
The initiative also reflects IFC’s priorities in Vietnam to support the banking sector and strengthen intermediaries in the agribusiness value chain.
“The Vietnamese agricultural sector is at a turning point, with growth increasingly leveraging increased efficiency, diversification, and value-addition. These types of partnerships with VPBank and Tan Long Group are key steps to enhance the competitiveness of the agribusiness value chain in Vietnam,” said Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia, and Lao PDR.
GWFP supports the agricultural sector by providing banks with liquidity or risk coverage backed by warehouse receipts, which can be used to provide financing in the form of short-term loans or guarantees to agricultural producers and traders.
To date, GWFP has supported more than $6 billion in global trade and more than 750,000 farmers in 66 emerging market countries.