The Chain: Feronia Has Successful Equity Raise For DRC Expansion Of Previous Unilever Assets

Feronia Inc (CVE:FRN), which trades on the Toronto Stock Exchange, successfully raised $2.5 million in an equity private placement valued at $0.22 per common share with the CDC Group PLC, UK Government Development Finance Institution and African Agriculture Fund, though its subsidiary Golden Oil Holdings Limited. Proceeds from the Offering will be used for working capital purposes and, in particular, to provide expansion capital for the Company’s subsidiaries in the Democratic Republic of the Congo.

Feronia

Feronia

Feronia acquired its palm oil business from Unilever in 2009. FRN is an agribusiness operating in the Democratic Republic of the Congo (DRC) with significant palm oil assets via Plantations et Huileries du Congo (PHC) and its three plantations: Lokutu, Yaligimba and Boteka. In 2015, it produced 16,700 tons of crude palm oil for domestic DRC consumption and employed more than 3,500 individuals.

Feronia’s Q3 2016 results were an improvement compared with Q3 2015. It produced 17 percent more tons crude palm oil at 5,273 tons and revenue was $4.3 million up from Q3 2015 revenue of $0.8 million. Q3 2016 net loss of $2.6 million was an improvement from Q3 2015 net loss of $8.4 million.

The UK Government development finance institution – via CDC Group – has a long history of investing in FRN. In November 2013, CDC invested $14.5 million to lead a $25 million equity funding round, giving CDC a 27.5 percent stake in the company. CDC also provided an additional $3.6 million convertible loan facility to support the implementation of a new Environmental and Social Action Plan for Feronia’s activities in the DRC.

Other development finance institutions have also supported Feronia. When Feronia bought Unilever’s 120,000 ha palm oil plantations in 2009, Feronia stated that it had lease agreements for the concessions. Yet at the Lokutu plantation, for example, where Feronia is one of the few local employers, some concerns remain regarding Free, Prior and Informed Consent. Several community members do not support Feronia’s claim to the concession’s title, despite DRC assurances as a co-investor in FRN. Feronia has stated they are committed to working with NGOs and community members to support resolution of all issues.



About the Author

Gabriel Thoumi, CFA, FRM
Gabriel Thoumi, CFA, FRM, is part of Chain Reaction Research, a coalition that includes Aidenvironment, Climate Advisers and Profundo. Chain Reaction Research is funded by the International Climate and Forest Initiative (NICFI) scheme managed by NORAD and the Packard Foundation. Chain Reaction Research does not necessarily reflect the standpoints of NORAD or the Packard Foundation. Gabriel Thoumi, CFA, FRM works as Director Capital Markets at Climate Advisers where he manages global financial analytics focusing on mitigating systemic climate risk while advising on “greening” capital markets. He has 18 years of experience managing and deploying frameworks to improve global capital markets sustainability through risk mitigation and return enhancement. Previously, for Calvert Investment Management, he valued global equity, index, and fixed income portfolios and their component positions in the utilities, energy, materials, chemicals, and financial sectors. He worked on quantitative index construction and asset allocation strategies. He engaged Fortune 500 CEOs on approaches to mitigating climate risk using financial risk management tools. He led initiatives to improve financial accounting of exchange-listed products and incorporated natural capital into financial tools. He has also worked at Morgan Stanley's carbon offset company, Wells Fargo Capital Management, and American Express. He is an adjunct at John Hopkins University.