moringafund

A Sustainable Agroforestry Fund

Sustainable, Protable Large-Scale Agroforestry Projects

Executive Summary

Moringa in a Nutshell
Moringa is a 100 M agroforestry fund which will invest in large scale, sustainable, and replicable agroforestry projects in Africa and Latin America. Portfolio projects will generate diversied revenue streams, and have a demonstrable positive impact on the environment and the livelihoods of local populations. Projects will also work against economic deforestation drivers by allowing stakeholders to benefit from agricultural, forestry and carbon markets. The fund is sponsored by ONF International (ONFI) in partnership with La Compagnie Benjamin de Rothschild (CBR), which bring together: a unique combination of forestry, nancial and environmental / social expertise a strong eld presence and network in Africa and Latin America, yielding a well-dened pipeline of replicable projects.

Agroforestry: A Protable and Sustainable Alternative to Deforestation

Agroforestry is the spatial or temporal combination of trees and crops or animals, with biological and economic synergies leading to higher productivity, reduced risk, more stable income for local populations, and positive environmental impacts. Agroforestry provides a protable alternative to the unsustainable land use scenarios that drive deforestation. Compared to these scenarios, well designed and well managed agroforestry projects provide: better risk mitigation in the short and long run higher protability in the long run. Agroforestry projects offer protable business opportunities which work against deforestation, and produce diversied revenues from local and / or export markets, including: forestry products (biomass, timber) agro products (export and food crops) carbon credits (sequestration and / or REDD+ assets). Moringa will focus on such projects which will also produce a positive environmental and social impact, and are expected to score highly on the Moringa E&S System matrix evaluation system. Projects will be designed to achieve relevant thirdparty sustainability certication (e.g. FSC, CCB, SAN) and may also seek Fair Trade or Organic certication.

Investment Proposition
Moringa will invest in projects on a large, yet manageable scale (usually 5-15,000 ha/project). It will leverage efcient management, technical excellence, economies of scale, replicability and outgrower initiatives to enhance its returns. The anticipated net return of 10 - 12% IRR is based on a robust risk mitigation policy strong fundamentals and long term positive market trends for agricultural and timber products. The net return calculation includes a conservative 25% cash flow discount. In addition to this nancial return, investors will benet from strong non-nancial impacts in the environmental and social spheres.

A Large-Scale Agroforestry Approach

A Diversied Revenue Stream over the Project Lifespan

Tropical agroforestry projects typically combine forestry activities (timber, industrial tree crops or fruit trees) with cattle, food crops, or niche export crops. This allows projects to generate revenues from diverse sources during the life of the Moringa investment and to offer potential acquirers a proven model for generating diversied revenues for the long term.

SHORT TERM REVENUES 0-5 years

MEDIUM TERM REVENUES 5-10 years

LONG TERM REVENUES 10-30 years

Subsistence or commercial intercropping Biomass residues to energy Timber wood High value agro- & by-products Carbon storage revenues REDD & IFM revenues Land valuation when applicable (with enhanced fertility & biodiversity)

Moringas Investment Term

Increased exit value due to natural capital increase and other factors

LOCAL DEFORESTATION SCENARIOS

LONG TERM PROJECT REVENUES PROJECT RISKS LO

PROFITABLE & SUSTAINABLE ALTERNATIVE: POSITIVE AGROFORESTRY

Environmental externalities
(carbon credits, etc.)

Intensive crops
Soy palm etc

Pasture ranching
Cattle meat etc

Intensive logging

Agroforestry synergies Subsistence & export crops

Compared to conventional timber or agricultural projects, the agroforestry approach ensures a more favourable risk / return prole through more effective use of land at reduced costs, with a diversied income base throughout the term of the investment.

Biomass and NLFP

Re-Inforcing Local Impact

A separate EUR5m Technical Assistance (TA) Facility will be created to enhance targeted projects and the local impact of the funds projects. Specically, the TA Facility will be used to achieve technical excellence at the project level, re-inforce outgrower activity, enable dissemination of success stories and build capacity at the project level.

Timber from cutting c

Timber from cutting

Timber

Technical risks T

Technical risk Agro./Env. risks

Agro./Env. risks A Soil S exhaustion, fire, wind, pests w Market risks M Price fluctuations P

Market risks Social risks Regulatory risks

Social risks Food competition, eviction of communities Regulatory risks Local & international

A Well Dened Pipeline

Strong Proprietary Dealow

Moringa has a well-developed pipeline of high quality, replicable investment opportunities already in place as a result of ONFIs activities, network and field presence. To date, over 25 high-potential projects have been contributed by ONFI and pre-screened by the Moringa Team. The team is actively sourcing additional opportunities via its own professional networks. Pipeline development is assisted by ONFI ofces in Sub-Saharan Africa (Cameroon, Gabon) and Latin America (Brasil, Colombia, Chile) see map below. Pipeline projects offer excellent diversication in product types and markets targeted. They are divided into three types (A/B/C) depending on the markets they address.

Project Types
Offtake Contract Production of sustainable timber and agro products to meet a specic industrial need International Market Production of sustainable timber and agro products for local and international markets Local Market Production of sustainable timber and agro products for large and growing local markets

Main Revenues
High quality timber, biomass energy, particular agro products, carbon credits

Targeted Exit Investors

Industrial offtake partners, and nancial investors

A B C

High quality timber and agro products, carbon credits

Timber industry corporations, traders and funds, agro industrials and funds, international investors

Charcoal, manioc, timber, carbon credits

Agricultural corporations and agro funds, local investors

The projects are further classied based on 3 stages of advancement: Advanced projects (level 1) ready for formal screening and due diligence. Investment could be closed within 6 months. Intermediary projects (level 2) are also in an advanced stage of development, but may need additional studies (such as feasibility analysis) and investment structuringbefore formal screening and due diligence. These projects could enter due diligence in ~ 6 months and be invested in ~ a year. Early stages projects (level 3) need 1 to 2 years of further development (pre-feasibility analysis, feasibility analysis, nancial structuring, etc.) before becoming investment candidates.

B A A B

Latin America | 9 projects 3 advanced 3 intermediary 3 early stage Africa | 17 projects 3 advanced 10 intermediary 4 early stage

B B

B B

A
A B A A A B C A C C C A C

ONFI local offices |

B
B

ONFI agencies |

A Well Dened Pipeline

Example of Type A Project | Sylvopastoralism in Latin America Unsustainable cattle ranching is one of the main deforestation drivers in Latin America, leaving behind millions of hectares of idle or degraded pasture lands. Working in partnership with local Colombian farmers, the project will reforest 6,500 ha of degraded pastures with high quality timber species and seek to optimize revenues from existing cattle farming activities through technical assistance. The project will deliver high quality wood for the pencil industry, in partnership with an international industrial corporation. It is registered as a CDM project and will also generate revenues from the carbon markets.

Example of Type B Project | Cashew nut production in Madagascar Developed by a leading agribusiness player, the project involves the planting of 6,500 ha of cashew trees. To maximize margins and job creation, nuts will be processed on site and premier kernels of the highest quality will be exported. The project will rehabilitate degraded lands and deliver signicant environmental benets through the creation of protected areas of 2,847 ha and a buffer zone of 7,000 ha. Its social impacts are strong with the anticipated employment of 2,600 people and substantial health care and education infrastructure to be developed. The plantation business plan is based on the excellent results already obtained from a mature 500 ha pilot plantation.

Example of Type C Project | Manioc and charcoal Production in DRC Illegal and unsustainable extraction of wood for energy purposes combined with slash and burn agricultural activities are the main drivers of deforestation in the Congo Basin. The objective of this project is to reforest 12,500 ha of degraded and unproductive savannahs to produce charcoal on a sustainable basis for a large city. The tree rows are intercropped with manioc to be sold in the large and growing nearby market. The project is registered as CDM eligible for carbon sequestration and as a pilot REDD project. It will thus generate diversied revenues (35% biomass energy, 35% manioc, 30% carbon credits). This model could be widely replicated across the Congo Basin.

Organisation and Governance

Organisation and Governance

The Moringa Organisation and Governance structure has been designed for effective deployment of the resources and capabilities of all parties for the benet of the Moringa Fund. An experienced core team will be supported by an active Board of Directors and Investment Committee and dedicated resources within the sponsor organisations.

The Investment Advisor

The core team of Moringa Partners, the Investment Advisor consists of four full time members supported by 4-5 full or part-time ONFI staff.
Herv BOURGUIGNON | Partner International management in emerging countries and in the forestry industry, acquisitions and sales of companies Clment CHENOST | Investment manager and technical director Forestry and natural resources management, project and carbon nance

Martin POULSEN | Partner Former Chief Private Equity Officer at the African Dev. Bank, Managed EIBs sub-Saharan African and Renewable Energy Private Equity Investments. Previously fund manager and agribusiness project engineer Guillaume MAILLARD | Investment manager and nancial director Private equity / project development / project nancing

The investment advisor, will play the central role in coordinating support from ONFI and CBR as well as other partners.

General Partner
The General Partner, a 100% subsidiary of CBR to be incorporated in Luxembourg, will be legally responsible for all investment and divestment decisions of the Fund. The Board of Directors and Investment Committee incorporate people with extensive experience and knowledge in: Forestry and agriculture African and Latin American economies and cultures Private equity investments Project nance

Board and Investment Committee (IC) members

La Compagnie Benjamin de Rothschild (CBR) Hugo FERREIRA | Board and IC member Deputy General Manager Planet Finance | Director Bernard Herman | Board member WWF International | CEO 1993-2005 Claude Martin | IC member La Compagnie Benjamin de Rothschild (CBR) Johnny EL HACHEM | Board and IC member Head of Environmental Finance Rabobank | Head of rural banking Carlos Ortiz | IC member Industrial Development Corporation Rian Coetzee | IC member Head Agro-Industries

The Technical Advisory Committee will be available to the fund management team as a source of additional technical advice and support. Technical Advisory Committee Members
FSC | Director General Andre de Freitas | TA Committee Member Additional members to be appointed after the first closing

Organisation and Governance

Partners
Moringa will benefit from the deep forestry, agroforestry and environmental and social sector experience of ONFI as Moringas Technical Partner.

Technical Partner | ONF International

ONFI and its subsidiaries (ONF Cameroon, Sylvafrica (Gabon), ONF Brazil, ONF Conosur, ONF Andina) will provide technical support to the Investment Advisor and its portfolio projects in the following areas, as needed: Investment period Years 1-5 Pre-feasibility analysis Feasibility analysis Technical assessment
of the projects during due diligence

Monitoring period Years 1-12 Support the development of the project by providing technical
assistance (plantation and forest management, carbon credits generation, project management, etc.)

Divestment period Years 8-12 Technical assistance to to the Investment

Advisor for exit planning and valuation of the project as necessary

Provide 4 to 5 locally based project managers to support

portfolio projects, Each manager will typically supervise a cluster of 2 or 3 projects, ensuring a permanent presence on the ground for each project

Moringa E&S System

Moringa will make use of the Moringa E&S System, an analytical framework and ranking methodology. This framework will: Assess the environmental value of each project by measuring its impact on 5 axes: energy, climate, resources and waste (including soil and water), health and toxicity, biodiversity Assess the social value of each project by measuring its impact in 5 elds: workforce, community participation, local development, access to common goods, social equity Ensure business and environmental risk mitigation as well as a higher exit value for the projects through a biological and social capital increase during the lifespan of an investment Increase the projects profitability by identifying the latest agro-environmental management methods and high-value marketing opportunities.

Principal Terms
Investment Type Direct investments in SPVs (equity and quasi-equity) Portfolio Strategy Majority and minority stakes, mostly in greenfield projects Investment per Project 5 to 10 M Target size | 100M Target IRR | (10-12% Net for investors (13-15% without a conservative 25% discount on cash flows)) First closing | Q4 2012 Final closing | Q2 2013 Legal structure SICAR, Luxembourg, with 2 sub-funds (Africa and Latin America) Fund duration | 12 years (+2+2) Investment period | 5 years Holding period | 8-12 years Management fees | 2% p.a. Carried interest | 20% of the capital gain with a hurdle rate of 7%

Advisors
Legal & Tax | Arendt & Medernach Auditors | PWC Central administration and depository bank | Caceis

Two Complementary Initiators

Premier environmental nance house, subsidiary of Groupe Edmond de Rothschild Over 20B$ in assets under management Highly experienced in fund structuring and management Strong relationships with industrial and nancial institutions as well as Development Finance Institutions Seed investor in the Moringa Fund (to be approved by the board of Directors of CBR)

International Subsidiary of ONF (French National Forests Ofce, 10MHa of forests, staff of 10,000, successor to the Administration des Eaux et Forts in 1291) 70 employees, over 30 in Africa and Latin America Sustainable forest management Reforestation/Afforestation Protected area management and rural development Climate change mitigation / Forest carbon management Bio-energy Deal sourcing capacitiy, plus provides technical expertise in forestry and agro-forestry through a service contract with Moringa

Contacts
Herv Bourguignon | Partner | Moringa Partnership +33 623 82 21 64 | h.bourguignon@moringapartnerships.com Martin Poulsen | Partner | Moringa Partnership +33 637 32 55 67 | +41 79 128 02 78 m.poulsen@moringapartnerships.com Clment Chenost | Investment Manager and Technical Director Moringa Partnership | +33 698 42 54 55 c.chenost@moringapartnership.com Guillaume Maillard | Investment Manager and Financial Director Moringa Partnership | +41 22 319 75 16 g.maillard@moringapartnership.com Martin Perrier | Chief Executive Ofcer | ONF International +33 140 19 78 35 | martin.perrier@onf.fr Johnny el Hachem | Head, Environmental Finance Compagnie Benjamin de Rothschild | +41 22 319 75 38 jelhachem@ctbr.ch

This document is for information purposes only and shall in no circumstances be considered as an operation involving the receipt of savings the private placement memorandum of Moringa Fund S.C.A., SICAR has not yet been approved by the Commission De Surveillance Du Secteur Financier (CSSF) and Moringa Fund S.C.A., SICAR is not currently registered as a SICAR.

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