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Projects

Project Brief

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.

 

Project name
Austin Scott Farms
Project ID
9330
Fiscal year
2011
Status
Active
Guarantee holder
Tulbagh Holdings LLC
Investor country
United States
Host country
South Africa
Environmental category
B
Sector
Agribusiness
Date SPG disclosed
August 30, 2010
Project Board date
October 07, 2010
Gross exposure
 $5.0 million
Project type
SIP

View Summary of Proposed Guarantee


On December 16, 2010, MIGA issued guarantees totaling $5 million to Tulbagh Holdings LLC of the United States for their investment in Austin Scott Farms winery in South Africa. The coverage is for a period of seven years against the risks of transfer restriction, expropriation, and war and civil disturbance.

The project consists of the acquisition of Austin Scott Farms situated on the southwestern flank of Tulbagh Mountain. The acquisition includes land (184 hectares), buildings, equipment, existing crops and stock, bottling plants, intellectual property, water rights, and all other assets or rights required for continued business operation. The investor intends to improve the quality of wines through investment and incorporating industry best practices into the vineyards, winemaking process, and structures. The wine production is expected to increase from 4,700 cases of premium wines for the 2011 vintage to approximately 13,500 cases in 2015, and 18,700 cases in 2017.

Tulbagh town’s main economic sectors consist of agriculture (vineyards and soft fruit), tourism, and services. It has experienced significant diversification of its economy with the emergence of a number of new small, medium, and micro businesses—particularly in the personal services, financial, and business sectors. Notwithstanding this economic growth there remains a great deal of unemployment, especially within the lower-income groups in the greater region. The project will have a significant socioeconomic benefit to Tulbagh and the surrounding communities by creating jobs (temporary in the construction phase and permanent in the operational phase) in various sectors, investing in the staff training, and generating rates and taxes for the Tulbagh Municipality. Workers will also be trained with the industry’s current standards and best practices to promote and build upon their skills. The investors intend to adhere to the principles underlying the Broad‐Based Black Economic Empowerment Act of 2004.

MIGA’s support for the project is aligned with the World Bank Group’s Country Partnership Strategy for South Africa that calls for the use of MIGA instruments to support small and medium-scale enterprises and increase developmentally-sound foreign direct investment. The project was underwritten through MIGA’s Small Investment Program.

 
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