TPG-Backed Agricultural-Tech Firm Sells Its First Green Bond

Solinftec, the Brazilian agricultural-technology firm backed by private equity giant TPG, is selling about 140 million reais ($27 million) of green bonds.

The inflation-linked securities, denominated in local currency, use agricultural receivables from Solinftec as collateral. That makes it possible to offer maturities of up to six years, unusual for a Brazilian company of Solinftec’s size, according to Chief Financial Officer Lais Braido.

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“We are financing our expansion into new clients and new products with long-term debt, and that’s very good news for us,” Braido said in an interview.

Brazilian investors are looking for higher-yielding alternatives to Treasury bonds as basic real interest rates hold below the rate of inflation. The sale of CRAs, as notes using agricultural receivables as collateral are called, surged to about 4.8 billion reais through April, almost double the amount in the same period last year, according to Anbima, the capital-markets association.

Demand is even stronger for bonds from companies with good environmental, social and governance practices, according to Luiz Ferraz, managing director of fixed-income distribution at Banco Itau BBA, which structured the transaction.

Solinftec’s technology connects in real time machinery used in the fields to a platform it calls Alice, which coordinates production to reduce the use of fuel, fertilizers and seeds. Local weather forecasts help the company advise clients on whether to spray pesticides, for instance, avoiding waste during strong winds or rain, and preventing the products from spreading to neighboring farms.

Equity investors in Solinftec include TPG’s alternative and renewable technologies growth equity platform, TPG Art; AgFunder Inc. and Unbox Capital, a private equity firm that invests part of the Trajano family’s fortune.

Read about the Trajano family’s investment in Solinftec

The CRAs were sold to about 35 investors, including hedge funds, family offices, credit funds and wealthy clients of private-banking units at Itau Unibanco Holding SA, Credit Suisse Group AG’s Brazilian unit and Banco BTG Pactual, Ferraz said. CRAs are tax-exempt for individuals in Brazil, and the ones from Solinftec offered attractive yields, he said.

About 90% of the notes mature in four years, with a one-year grace period, and the rest are due in six years with a three-year grace period. The longer-term CRAs feature yields that vary based on revenue performance. The firm generates 120 million reais in recurring annual revenue, and about 45 million reais in customer contracts have been used as collateral.

“Many clients who use our services are huge Brazilian companies with the best credit rating possible, and our contracts with them last up to eight years, so we have top-quality receivables to offer as collateral,” Braido said.

Planeta Securitizadora Agro, a unit of Gaia Securitizadora SA, managed the deal. The ESG certification came from the Climate Bonds Initiative, while Sitawi Financas do Bem issued a second opinion.