Cedar Oxygen Deploys First Impact Trade Financing to Lebanon
- Trade Finance , Investment Management
- 14.12.2020 09:03 am
Cedar Oxygen, a Luxembourg domiciled, impact investment trade finance platform, has announced that it has arranged its first finance facility to Lebanese Roasting Group Sal (‘Castania’), a leading Lebanese player in the nuts and snacks sector. The finance will support the import of needed raw materials and is the first in a series of major deployments which are hoped will breathe long-term life into the Lebanese economy.
Founded by expat Lebanese business leaders, Cedar Oxygen is seeking to address the US$2bn short-term finance shortfall faced by Lebanese manufacturers and industrialists. A lack of import finance is currently preventing them from procuring raw materials, limited export finance is hampering logistics around exporting products and a deficit in receivable finance is impacting the sale of the finished products.
This deployment is a crucial milestone towards Cedar Oxygen providing short-term financing solutions to Lebanese borrowers, in partnership with the Association of Lebanese Industrialists. It is also digitalizing trade finance and delivering a “real economy” credit offering for Lebanese borrowers and a much-needed roadmap for the next few years of inclusive finance. It is the first of its kind in Lebanon.
Alexandre J. Harkous, Chairman & Managing Partner of Cedar Oxygen, said: “This deployment is a crucial first step in addressing the world’s most critical impact investment opportunity and in revitalising the Lebanese economy, one company at a time. Providing trade finance solutions will help manufacturers to trade their way out of the economic crisis and reduce the country’s dependence on short-term aid.
“Currently a shortage of dollars is making it difficult to import any raw materials and allow life in Lebanon to get back to normal. The Lebanese economy is heavily dependent on international trade, and we aim to provide the trade finance facilities that will power its economic regeneration.”
Peter Daniel, Chief Executive Officer of Lebanese Roasting Group, said: “Thanks to the professionalism and perseverance of Cedar Oxygen and the trade financing facilities provided, we are able to pass through the difficult situation in Lebanon , keeping our supply chain flowing, from import to production to export: leading to sustaining the business , safeguarding our workforce and maintaining Castania as Lebanon’s favourite and affordable snack.”
Earlier this year Cedar Oxygen secured a $175 million anchor investment and is now seeking additional investment from DFIs (Development Finance Institutions) and other impact-focused institutions that are focused on boosting their Impact and ESG strategies, as well as securing protected returns.
Lebanon has 4,700 industrial firms generating around 14% of GDP. These firms account for 93% of Lebanese exports, generating around $3.17 billion in finished goods sales per annum. In addition, the sector accounts for around $1.8 billion in raw material imports into Lebanon.
Mark Smyth, Chief Investment Officer of Cedar Oxygen, said: “Lebanese Roasting Group is typical of the type of company we are looking to support as it has a robust business model and serves an attractive, international market, but faces difficulties due to a lack of trade financing. Similar deployments will enable us to mitigate risks and deliver stable returns to international investors.”
Cedar Oxygen aims to raise additional funds up to $500 million in a dedicated Regulated Alternative Investment Fund (RAIF) structure, which will be used for short term loans to fund the majority of the Lebanese industrial landscape. At the same time, it will provide investors who want to support, an impact platform in Lebanon to deliver risk-adjusted returns to help finance and revitalise the Lebanese economy.
Dr. Fady Gemayel, President of the Association of Lebanese Industrialists, said: “The first transaction of Cedar Oxygen is very good news for the Lebanese industrialists specifically and for Lebanon in General. In these difficult times, Cedar Oxygen will provide a breath of fresh air and will create a social, economic and financial impact in Lebanon. We, as the Association of Lebanese Industrialists, are looking forward to working very closely with Cedar Oxygen so the biggest number of industrialists can benefit from this lifeline.”
Cedar Oxygen’s Environmental, Social and Governance (ESG) approach includes the execution of a business model that adds value to society through its product offerings. This Fund will complement Cedar Oxygen’s existing efforts, with the goal of achieving financial returns that will be re-invested to finance Lebanese industrialists while making a positive societal impact. The focus areas above are areas where Cedar Oxygen has experience through its business transactions and its own operations and advocacy.
For more information: www.cedaroxygen.com.