SAUDI ARABIA – Almaria, the Gulf’s leading dairy company based in Saudi Arabia, has secured US$100 million funding from the European Bank for Reconstruction and Development (EBRD) to boost operations of its subsidiaries.
Almaria intends to use up to US$90 million of the proceeds from the loan to fund its dairy and juice production capacity expansion for its subsidiary in Egypt, Beyti.
The dairy and juice company has also earmarked US$10 million for Teeba in Jordan to strengthen its capital base and fund its permanent working capital needs.
EBRD said the loan is expected to strengthen backward linkages to local farmers with an increase in the number of partner farms in Egypt that will comply with Beyti’s procurement rules, and the transfer of know-how to existing local farmers in Jordan.
It also expects the cash injection to expand Beyti’s exports to foreign markets and benefit FDI inflows for both the Egyptian and Jordanian dairy and juice sectors.
Both Beyti and Teeba are majority owned and controlled by Almarai via a 52% stake while the remaining 48% is held by Pepsico Inc.
Beyti and Almarai set animal welfare and environmental standards that milk supplier farms are required to meet. Beyti is an existing client of the EBRD and has been “satisfactorily” reporting on environment and social matters, said the bank.
An audit process is used to assess farms before they can supply milk to the company, and all suppliers are regularly audited for quality, environment, social and health and safety aspects.
Through technical cooperation funds, and post signing of the loan, a technical study will be planed in Jordan raw milk supply chain in an effort to highlight best practices and potential iimprovements in the sector.
EBRD noted that the sector has been suffering recently from low prices driven by excess supply, low yields, and quality and traceability issues.
The study will aim to identify bottlenecks in the sector in Jordan and develop recommendations to overcome current issues in the sector.
Almarai’s biggest shareholder is Saudi investment holding firm Savola Group, which owns 34.5 per cent of the company.