Leumi to finance Papua New Guinea dairy farm

Bank Leumi will provide $37 million in financing for the venture being founded by Israel’s LR Group.

Bank Leumi will provide $37 million in financing for setting up a cow farm and dairy in Papua New Guinea. Israel’s LR Group, controlled by Ami Lustig & Roy Ben Yami, will found the venture.

The financing will be in the form of buyer’s credit, in which the financing bank actually finances the Papua New Guinea government-owned company receiving services from the LR Group.

The bank grants the financing to the venture, which is then transferred to LR. The financing is backed by a guarantee from the local government, and the Israel Foreign Trade Risks Insurance Corporation (Ashra) is also insuring the loan. The credit insurance reduces the risk in financing the deal in a developing country like Papua New Guinea.

Founded 31 years ago, the LR group manages hundreds of millions of dollars in investments. The group operates agricultural ventures, mainly in developing countries, and provides advanced technology to improve their ability to expand their volume of business. The group operates below the media radar, but Lustig spoke briefly about his business last year at the Forbes Magazine conference.

“The investments by various governments in agriculture are continually growing smaller. The World Bank is also cutting down its investments in this field. Only poorest and most unfortunate farmers are left to invest in the field, and the worldwide needs in agriculture relating to technology and investment are enormous,” Lustig said, noting that as of 2015, his company was managing ventures worth over $900 million.

Lively business, with an eye to China

The current financing deal was led by Bank Leumi’s Corporate and Commercial Division, headed by Koby Haber. After several years of continual decline in the bank’s business credit portfolio (in line with the trend at most banks), the trend recently reversed. Bank Leumi’s business credit portfolio grew by NIS 2.5 billion to NIS 44 billion in the second quarter of this year. The bank has a special unit for financing deals by Israeli exports with buyers in various countries.

Bank Leumi said that in recent years, there has been an increase in the number of queries pertaining to medium and long-term export ventures mostly up to 12 years in developing countries, especially Africa, with most of the ventures being in agriculture, water, and communications.

The bank added that in addition to Africa, there has also been considerable activity by ventures in China and that over the past 18 months, Bank Leumi has signed financing agreements totaling over NIS 1 billion with Chinese banks for export deals to China.

Published by Globes [online], Israel business news – www.globes-online.com – on September 8, 2016

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