Royal FrieslandCampina N.V., Highly Commended, Best Financing Solution

Published: Jul 2016


Photo of Klaas Springer, Royal FrieslandCampina and Meg Coates.


Royal FrieslandCampina is an unrated company which makes this financing solution a little different. This solution includes a Schuldschein, a type of privately-placed German debt similar to a mid-term note and is the first green debt instrument to be issued by a dairy company and the first issued by a non-German issuer. Read how they did this.

Klaas A. Springer

Director Corporate Treasury

FrieslandCampina is a Dutch dairy cooperative. It is the result of a merger between Royal Friesland Foods and Campina in December 2008. FrieslandCampina is Europe’s largest dairy cooperative and the second largest in the world with annual revenue of €11.4bn. FrieslandCampina has offices in 28 countries and employs a total of 21,186 people.

The challenge

FrieslandCampina is an unrated company which requires financing of around €300m per year to support its Route2020 strategy (including acquisitions and climate-neutral growth). Not to use a public credit rating has been a deliberate choice of the owners of the company, which, of course, limits financing options to a certain extent. In order to raise additional resources in line with company strategy, and to diversify its investor base now consisting of banks and USPP investors, the Finance Plan for 2016-2018 had three main building blocks:

  • Green debt issuance. As a first issue of a green Schuldschein to be completed on 1st April for €300m adding a range of mainly European, Chinese and green investors.
  • Diversifying to Multilateral Development Banks (MDBs) targeting €200-250m. The first loan to be implemented with the European Investment Bank (EIB) in June of €150m, related to the company’s European R&D.
  • A further rolling out of the company’s global supply chain finance programme, which was first rolled-out in 2014.

The solution

Green Schuldschein

The Schuldschein – a type of privately-placed German bond similar to a mid-term note – was issued in four tranches:

  • Five year, fixed, 0.93% for €48.5m.
  • Seven year, fixed, 1.39% for €176.5m.
  • Eight and a half year, fixed, 1.71% for €30m.
  • Ten year, fixed, 2% for €45m.

The proceeds from the Schuldschein will be used in eligible projects under FrieslandCampina’s green bond framework, which is in line with the Global Dairy Agenda for Action’s Dairy Sustainability Framework. These eligible projects include efforts to reduce the ‘environmental footprint’ of the company’s factories, to which 80-90% of the bond’s proceeds will be allocated, sustainable farmer development programmes in developing markets, and the ‘development of healthier products’.

“The environmental footprint portion is dominant, which has always been our plan. That’s also the main reason for calling it green instead of sustainable,” says Klaas Springer, Director Corporate Treasury at Royal FrieslandCampina.

Vigeo Eiris provided a second opinion on the sustainability of the framework and scored its environmental impact as “robust”, the second best score under its rating criteria.

Multilateral development banks (MDBs)

In project Fondue (2014) the company determined which MDBs might have the best fit with FrieslandCampina’s strategy and culture. As Klaas Springer explains: “We started to explore relationships with EIB, FMO, IFC and EBRD. EIB for straight financing and the latter three to be involved in M&A.” Treasury used private consultant FixCorp in project Fondue and approached relevant MDB’s on their own.

Supply chain financing

The company’s global supply chain finance solution with one platform bank and three co-funders rolled out together with central procurement. Citi provides the global platform, whilst Mizuho, Lloyds Bank and Intesa are co-funders.

Best practice and innovation

FrieslandCampina’s treasury demonstrated best practice and innovation by coping with the given limitations of being an unrated issuer whilst simultaneously securing financing consistent with the company’s CSR/sustainability strategy. Hans Biemans, Head of Sustainability at Rabobank, the green structuring advisor for the bond, says that it was a “landmark deal”, pointing out that this is the first dairy company to issue a green bond.

Springer agrees, adding: “The green Schuldschein is the first green debt instrument issued by a dairy company and the first one issued by a non-German issuer.”

In addition, the solution also:

  • Uses the CSR orientation of MDBs to attract them as stakeholders.
  • Leverages global supplier and bank relationships to generate financing.

Key benefits

  • Delivers effective funding.
  • Satisfies company’s CSR culture.
  • Diversification of funding sources.

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