December 7, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Leading European asset manager Amundi has launched the Amundi Ambition Agri-Agro Direct Lending Europe (AAAA) institutional investment strategy with a first close at €130 million (US$140.12 million) following a capital commitment from Crédit Agricole Group.

With nearly 1.3 million farmers, Amundi explained that the European Union is the third-largest agricultural sector and largest exporter of ag products in the world. This juggernaut is operating with significant unmet financing needs, reflecting a gap estimated to be between €20-€40 billion (US$21.5 million-$41.3 million) each year. 

In fact, the unmet need from Europe’s farmers for financing reached  €62 billion in 2022, according to two surveys presented at the ninth annual EU conference on EAFRD-funded financial instruments, which was organized by The European Commission’s Directorate-General for Agriculture and Rural Development (DG AGRI) and the European Investment Bank (EIB) on October 12, 2023. 

“EU banks’ requirements on farmers are heavy and stringent, making it very difficult for agricultural producers and young farmers to compete with other businesses from the economy where the output may be seen on the day after the company is created,” said Janusz Wojciechowski, European Commissioner for Agriculture and Rural Development, in his opening speech. “It is critical that the financial market opens up to financing farmers on an equal footing and that Member States focus on the use of financial instruments in their CAP Strategic Plans.”

Through these surveys, 6,550 of Europe’s farmers and 2,389 EU-based agri-food businesses were paneled, finding that unmet financing of primary agricultural producers nearly doubled since 2017, rising from €33 billion (US$35.5 billion) to €62 billion (US$66.8 billion). And while rejection rates have decreased, the amounts being requested have risen leading to larger amounts of funding being withheld despite fewer rejections. 

Furthermore, the survey found that of the total funding gap, €18.9 billion (US$20.3 billion) worth of investments linked to a green agricultural transition were left unmet in 2022. 

The launch of the AAAA Fund is part of Crédit Agricole Group’s societal project with a specific aim of moving the needle for the European agricultural and agri-food sectors toward a more sustainable and competitive food system – a mission with which Crédit Agricole Group is strongly aligned.

“With this ambitious program, which is part of the Crédit Agricole Group’s societal project, Amundi is continuing to help finance the transition of economic players in a sector that is particularly critical to the European economy and combating climate change,” said Dominique Carrel-Billiard, head of Amundi Alternative and Real Assets.

With a total funding target of €750 million (US$808.3 million), the AAAA Fund aims to fill the breach by financing European agricultural and agri-food companies working to transition to a more sustainable, low-carbon model of operation to preserve resources and ensure food security. 

“We want to offer investors an innovative investment solution that will help companies in the agri-food and agro-industrial sectors to make strategic changes towards a competitive and sustainable system,” said Thierry Vallière, head of private debt, Amundi. 

Employing a direct lending impact strategy, the fund will be managed by Amundi Real and Alternative Assets’ Private Debt team which will work to support the development of agricultural and agri-food SMEs, mid-sized businesses, and cooperatives across Europe through various senior, unitranche, and subordinate debt instruments.

“This new fund offers companies in the agriculture and agri-food sector an alternative and complementary financing solution to traditional debt,” said Jean-Pierre Touzet, head of the Agri-Agro – Guarantee – Capital Development division, Crédit Agricole S.A. 

“It completes the Crédit Agricole Group’s “Ambition Agri-Agro” range, which includes a private equity fund managed by IDIA Capital Investissement and an innovation capital fund managed by our partner Supernova Invest, both of which are already operational. Our ambition is to mobilize a total of €1 billion (US$1.08 billion) to finance transitions in the agriculture and agri-food sector.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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