Share the full article
Vietnam made strides in sustainable agriculture with two deals; a bond issuance to support eco-friendly fish farming and an impact-linked loan to help rice farmers adopt organic farming practices.
The International Development and Investment Corp., a leading Vietnamese processor and exporter of catfish, issued what’s touted as the first green bond by a non-financial institution in Asia’s aquaculture sector. The bond was oversubscribed and drew investment from insurance providers Manulife Vietnam and AIA Vietnam. The proceeds will help IDI expand its eco-friendly breeding, hatchery and processing facilities in response to high demand for the Vietnamese pangasius; Vietnam exported more than 83,000 tons of the catfish variety in May alone.
Catalytic capital
GuarantCo, which mobilizes private funding for infrastructure projects in Africa and Asia, is providing a trillion Vietnamese dongs ($40 million) guarantee for the bonds.
“As Vietnam aims to establish itself as the world’s leading seafood processing center, securing access to green finance is essential for the necessary upgrades to its sustainable infrastructure,” said Helena McLeod with Global Green Growth Institute, which collaborated with GuarantCo on the transaction. GuarantCo’s parent company Private Infrastructure Development Group will provide International Development and Investment with technical assistance grants.
This marks the firm’s first deal in aquaculture and follows GuarantCo’s $50 million partial credit guarantee in 2022, for a bond issued by Vietnamese non-bank financial institution EVN Finance.
“The transaction will further address infrastructure financing gaps in Vietnam, through demonstration and replication effects of use of green bonds for non-financial companies in Vietnam,” said GuarantCo’s Nishant Kumar.
Organic premium
Separately, California-based impact investor Beneficial Returns made its inaugural loan in Vietnam to Hoa Nang Organic, a female-founded rice producer and exporter to Japan, US and Europe. Hoa Nang is keen on helping farmers in Vietnam’s Mekong Delta region, where most of the country’s rice is grown, to transition to organic farming.
Hoa Nang’s “shrimp-rice” model helps farmers integrate farming and aquaculture, using organic waste from shrimp as rice fertilizer and creating dual-income streams. Hoa Nang says farmers can fetch a 15% to 20% premium above non-organic rice prices.
Beneficial Returns’ investment will help Hoa Nang pay farmers after harvest and help them purchase inputs at the start of the season. Hoa Nang also is a portfolio company of the gender-lens investment fund Beacon Fund.
The investor provides impact-linked loans via its Reciprocity Fund, which provides debt for businesses in Latin America and SouthEast Asia that serve Indigenous communities. The fund re-upped its investment in Indonesia’s Kawanasi in March this year to purchase automatic nut packaging equipment and offered a loan to Peruvian cacao cooperative Coa Vraem in September, amid the fund’s near $700, 000 raise.
