Global dairy giant set to get 51pc shares of Engro Foods

ISLAMABAD: 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 development of Pakistan's crucial dairy industry.

In a statement issued here on Friday, it states that 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-holding 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.