ADEP – first to tap Brazil’s Halal food industry with a US$25 million financing program - IFN

ADEP – first to tap Brazil’s Halal food industry with a US$25 million financing program

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BRAZIL: Abu Dhabi Equity Partners (ADEP) has successfully initiated the first Shariah compliant livestock financing program in Brazil. With an investment of up to US$25 million over a period of three months, the funding will be used for the fattening of 70,000 cattle heads, an amount which is approximately the metric ton equivalent of the UAE's entire annual import of beef. The transaction will allow a selected group of Brazil’s ‘Top 40’ cattle feedlot operators to increase their capacity utilization in Goias and Sao Paolo. The financing scheme was engineered to incorporate a combination of Wakalah and Murabahah agreements to enable investors to purchase titles of traded cattle from a rancher and subsequently selling it to Brazil's key global beef processing companies at a principal plus agreed profit rate on a payment against delivery basis; with ADEP being appointed as an agent and the rancher as a sub-agent. Commenting on their venture, Muneef O Tarmoom, the managing partner of ADEP, said: “Shariah compliant funding of the growing multi-billion US dollar Halal food industry is a natural yet untapped market segment for both agri-producers and institutional investors.” He further elucidated that the surplus agri-trade balance in Brazil is expected to grow with world demand attributed to the highest excess farmland, renewable water resources and good weather conditions. Juan Fernando Valdivieso, also managing partner of ADEP, added that the deal offers investors an avenue of pure Shariah compliant investments with an attractive yield pick-up for their capital and profit rate-protected investments. “The hard work in originating attractive deals in Brazil is now beginning to pay ample dividends with deals being closed, and over US$100 million-worth of identified physical cattle and sugarcane-based transactions in the pipeline for 2014,” said Valdivieso. Registered in Cayman Islands, ADEP is a Shariah compliant liquidity management instrument investment house which develops financing instruments to finance working capital and operations of select commodity growers and producers in emerging markets. The firm raised over US$200 million in the last five years for the companies they have founded.