• DFC commits a US$20mn loan to Samunnati
  • Loan to provide impetus to Samunnati’s catalytic financing model for agriculture value chains to function at a higher equilibrium
  • Funds will be used to expand financing to Agribusinesses and Farmer Producer Organizations (FPOs) contributing to financial inclusion, increased productivity, earnings and market reach for smallholder farmers
  • Setuka Partners LLP, based in Washington DC, were the exclusive advisors on this transaction. 

U.S. International Development Finance Corporation (DFC) has committed a $20mn direct loan to Samunnati Financial Intermediation & Services Pvt. Ltd., a non-banking financial company (NBFC) in India to help the company expand financing and technical assistance to low-income farmers and enterprises throughout the agricultural value chain in India. Setuka Partners LLP were the exclusive advisors to this transaction.

Samunnati is a specialized Agri Value Chain Solutions provider that offers customized financial, co-financial and non-financial solutions to farmer producer organizations and agricultural enterprises across the value chain. Founded in 2014, Samunnati exclusively works in the agriculture sector, with a mission ‘to make market work for the small holder farmers’ by making the value chains operate at a higher equilibrium. The organization works with a belief that for a value chain to work well, all the actors in the chain need to have access to markets, appropriate financial services and advisory services customized to suit the requirements of the value chain and align their incentives. Samunnati’s value chain financing model expands inclusion of smallholder farmers into the formal financial system while optimizing their costs by enabling agriculture value chains to operate at a higher equilibrium contributing to increased productivity, enhanced earnings, and improved market reach.

The company plans to use the funds to make loans to FPOs and SME Agribusinesses that are currently underserved by the formal financial system. This financing from the U.S. International Development Finance Corporation (DFC) further endorses Samunnati’s differentiated model that leverages the social capital and trade capital in buyer seller relationships relying on the strength of the transaction as opposed to the traditional underwriting of mainstream financial institutions based on hard collateral security, capitalisation, and past profitability. The loan will allow Samunnati to strengthen its financing which enables smallholder collectives to connect to the fast growing higher value demand for agri-products across India.

Anilkumar SG, Founder and CEO, Samunnati said, “Samunnati is working with many FPOs on the supply side and Agri Enterprises on the demand side across 19 states in India. We are delighted to partner with DFC as this will help us further offer customized financial solutions, using social and trade capital, to FPOs and SMEs, enabling the agri value chain to operate at a higher equilibrium.”

DFC, America’s development bank, provides financing to address critical challenges across emerging markets globally. DFC invests across sectors including energy, healthcare, critical infrastructure, and technology and provides financing for small businesses and women entrepreneurs in order to create jobs in emerging markets. The investment in Samunnati - which has been committed after a stringent due diligence process - demonstrates DFC’s commitment to supporting financial inclusion in India’s food and agriculture sector.

Ajay Rao, Managing Director – South Asia Region, DFC who led this transaction said, “We are very impressed with Samunnati’s pioneering work in agriculture value chain finance in India which contributes to making agriculture value chains more efficient, enables more produce to flow through the value chain, lowers food waste and provides for higher and stable incomes for smallholder farmers. The DFC is proud to work together with the experienced team at Samunnati and we look forward to collaborate in scaling up the breadth and depth of the company’s operations across India.”

Samunnati has previously raised equity financing from Elevar, Accel, ResponsAbility and Nuveen, and debt financing from a host of prestigious local and international financial institutions.

About Samunnati Financial Intermediation & Services Pvt. Ltd.

The term ‘Samunnati’ means ‘collective growth, collective prosperity, collective elevation’. Started in 2014 as the only specialized Agri Value Chain Solutions provider, the organization is steered by one vision ‘to make market work for the small holder farmers’ by making the value chains operate at a higher equilibrium. The organization leverages on ‘social’ and ‘trade’ capital to offer customized financial solutions to stakeholders across the agri value chain. Samunnati’s growth-oriented approach, known as AMLA [Aggregation, Market Linkages and Advisory services] empowers the agricultural community by supporting them build better market linkages and using relevant technology and skills for growth. Headquartered in Chennai, Tamil Nadu, India, Samunnati has its presence in more than 54 agri value chains spread over 19 states in India. https://www.samunnati.com

About Setuka Partners LLP (www.setuka.in)

Setuka Partners LLP is a mission driven enterprise that provides hands-on support in capital raising and capacity development to for-profit social enterprises working with underprivileged populations in emerging and frontier markets. Founded in April 2019 by Aman Khanna and based in Washington DC, the firm has already unlocked catalytic capital and value creation for investors and social enterprises across such markets.

Post a Comment

Previous Post Next Post
Like this content? Sign up for our daily newsletter to get latest updates.