Introduction to the Brazil Nut ePPNs

Overview

The Brazil Nut ePPNs is an attractive investment proposition that leverages the fast-growing Brazil nuts market. Issued by IDAP Alternative Investments S.a.r.l., these profit-participating notes offer investors a unique opportunity to tap into a sustainable agro strategy with a lucrative return potential. Each ePPN represents a fractional beneficial interest in the existing, purchased raw Brazil nuts and an obligation of the Program Manager to process and distribute the final product. The standard quantities sold are 16,000 kg of the final product, which represents one shipping container. Cash flows are generated from the sale to wholesale distribution, and profits are shared between the Program Manager and the ePPN holders on a quarterly basis.

The Program Manager: White Lion Foods

White Lion Foods, an agritech group and a global leader in the production and export of Brazil nuts, acts as the Program Manager. White Lion's operations span across multiple countries, including Singapore, Hong Kong, South Korea, Australia, USA, Brazil, and Peru. They use advanced technology to produce top-quality nuts and garlic, with a significant market share in the exportation of Peruvian Brazil Nuts and Andean purple garlic. Their state-of-the-art processing factory in the heart of the Amazon forest allows for higher product quality, efficiency, and sustainability. As the Program Manager, White Lion Foods oversees the sourcing, production, and selling of the product to the market.

The Issuer: IDAP Alternative Investments S.a.r.l.

IDAP Alternative Investments S.à r.l. is the issuer of the Brazil Nut ePPNs. IDAP is an investment and strategic advisory firm incorporated under the laws of Luxembourg. They specialize in providing tradable SME alternative assets and private equity through distributed finance. The firm has established a strong reputation for its innovative and diversified product offerings. Their role in this investment opportunity is to issue the ePPNs, facilitating the investment process for interested parties, and providing a secure and regulated platform for the transaction.

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Investment Highlights

Quarterly Distributed Cash-Yield

Brazil Nut ePPNs offer an attractive cash yield that is distributed quarterly. With an expected annual yield between 8% and 13%, investors can enjoy a consistent income stream throughout the year. This yield is generated through the sale of Brazil nuts to wholesale distribution, ensuring a reliable cash flow.

Market Leadership and Expertise

The Program Manager, White Lion Foods, is a market leader in the production and export of Brazil nuts. With operations across multiple countries and a state-of-the-art processing facility in the Amazon forest, White Lion Foods leverages their expertise and technology to deliver the highest quality products. This ensures a steady and reliable source of raw Brazil nuts for processing and sale, contributing to the stability and profitability of the investment.

Profit-Participation Cash Yield

Investors in Brazil Nut ePPNs not only gain exposure to the growing Brazil nuts market but also directly participate in the profits generated from the sale of these nuts. This offers a unique profit-participation cash yield, with investors sharing in the gross profit from the spread between the purchase price of raw Brazil nuts and their sale price.

Limited Risk Exposure

Brazil Nut ePPNs offer a limited risk exposure for investors. The ePPNs represent a fractional beneficial interest in the underlying Brazil nuts, limiting the exposure to the enterprise risk of White Lion Foods. Additionally, the purchase price of the nuts is usually at least 30% below commodity spot prices, and all products are insured from storage through delivery, further reducing the risk to principal.

Tradable ePPNs

Brazil Nut ePPNs offer the added advantage of tradability. These profit-participating notes are immediately tradable in peer-to-peer transactions with other eligible investors, including institutional, professional, or qualified investors. This offers the potential for added liquidity and flexibility, although the actual liquidity will depend on the activity of the secondary market.

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Project Overview

Use of Proceeds

The funds raised from the issuance of Brazil Nut ePPNs will be primarily used to purchase raw Brazil nuts from White Lion Foods. The nuts, procured directly from harvesters in the Amazon rainforest, will be processed into shipping containers of processed Brazil nuts. This strategy leverages the established and growing Brazil nut market, providing investors with an opportunity for cash returns through a unique, sustainable agro strategy.

Procurement and Processing of Brazil Nuts

White Lion Foods, acting as the Program Manager, will be responsible for the procurement and processing of Brazil nuts. The raw Brazil nuts, bought directly from harvesters in the Amazon rainforest, will be processed at White Lion Foods' state-of-the-art facility. The processed nuts will then be sold to wholesale distributors worldwide, creating the cash flow that generates the quarterly yield for investors.

Role of the Program Manager and the Advisor

The Program Manager, White Lion Foods, is responsible for sourcing, producing, and selling Brazil nuts, leveraging its facilities and sales network. The Advisor, on behalf of the Issuer, oversees the Program Manager and its principal service providers, though it does not exercise day-to-day oversight. This structure ensures that all development, distribution, and sales costs are taken care of by the Program Manager, and investors' returns are ring-fenced from other business expenses and liabilities.

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Brazil Nut Market & Trends

Seasonality and Market Dynamics

Brazil nuts are harvested seasonally, but purchased throughout the year, which helps smooth out price fluctuations and ensures a steady supply of nuts for processing. As one of the leading exporters of Brazil nuts, White Lion Foods is well-positioned to navigate these market dynamics and capitalize on opportunities as they arise.

Applications and Demand

Beyond being a food source, Brazil nuts have a wide range of applications across various industries. These nuts are used in cosmetics and hygiene products like shampoos, conditioners, soaps, and skin-care products. This diversified demand for Brazil nuts helps stabilize their market price and contributes to the potential returns for Brazil Nut ePPNs investors.

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About White Lion Foods

Company History and Growth

White Lion Foods was founded in 2012 by British co-founders, Gareth Lloyd and Gregory Vickers. Starting from a single site, the company expanded its operations and currently has five production facilities in Peru and Brazil. It is now a global leader in the production and exportation of Brazil nuts, delivering thousands of tonnes of product to over 30 countries around the globe.

In 2016, White Lion Foods made a strategic move to establish White Lion Nuts S.A.C. in Tambopata — Madre de Dios, Peru. This step included the acquisition of land and the construction of a state-of-the-art processing facility, increasing the company's production capabilities and efficiency.

Strategic Positioning and Competitive Advantage

White Lion Foods' facilities are strategically positioned in Brazil’s, Peru’s, and Bolivia’s Amazon region. By locating facilities close to the source, the company is able to procure the highest quality and freshest raw products at the lowest prices. This strategic positioning enables the company to deliver a high-quality end product at a highly competitive price, while still maintaining a strong margin.

Future Projections

By 2019, White Lion Foods was producing 129 metric tons of Brazil nuts per year, capturing about 2.41% of the global market share. With the completion of their primary factory, the company significantly increased its production capabilities. They are on track to exceed 50% market share in the Brazil nut market by 2023, demonstrating a remarkable growth trajectory.

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Leadership Team

Gareth Lloyd: Chairman

Gareth Lloyd is an international entrepreneur and business executive. Co-founder of the global recruitment and consulting group Amoria Bond, he has the expertise and resources to develop businesses on a global scale. With a strong business footprint and property portfolio across five continents, Gareth brings strategic oversight to White Lion Foods.

Gregory Vickers: CEO

Gregory Vickers has been at the heart of White Lion Foods since its inception. Responsible for the acquisition of land, construction of facilities, setup and recruitment, Gregory's leadership has been instrumental in the company's growth. Fluent in Portuguese and Spanish, Gregory's international sales and operations experience has helped the company expand rapidly. He is based in Peru.

Amir Khayat: CFO

Amir Khayat, a chartered accountant by background, has a wealth of international experience. Having held senior finance positions in various sectors including agriculture, power, engineering, oil & gas, and professional services, Amir brings a comprehensive understanding of financial reporting, taxation, compliance, corporate finance, and M&A to the team at White Lion Foods. His expertise is crucial in maintaining the financial health of the company.

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Financial Information

Profit-Participation Mechanism

Brazil Nut ePPNs are profit-participating notes, representing 100% ownership of the corresponding amount of Brazil nuts, sourced, processed, and managed by White Lion Foods PTE LTD. The profit is derived from the difference between the average sale price in the month of sale and the average purchase price in the month of purchase. This profit-participation mechanism allows investors to directly benefit from the efficient sourcing, processing, and selling of Brazil nuts by White Lion Foods.

Profit Distribution

The distribution of profits is carefully structured to balance the interests of both the Issuer and the Program Manager. Up to 110% of the purchase price, 50% of the profit is attributed equally to the Issuer and the Program Manager. This ensures that both parties share the rewards of successful operations. Any additional profit beyond this threshold is also shared, with 13% retained by the Issuer, and the remainder paid to the Program Manager. This tiered profit distribution mechanism incentivizes the Program Manager to maximize the profitability of the operations, which in turn benefits the ePPN holders.

Expected Annual Yield

Investors in Brazil Nut ePPNs can expect an annual yield on their investment in the range of 8% — 13%. This yield is paid out as a quarterly distribution of profits, providing regular income for investors. The projected yield reflects the efficient operations of White Lion Foods, the robust demand for Brazil nuts, and the strong profit margin on the sale of the nuts. However, investors should note that this is a projected yield and actual returns may vary based on market conditions and operational performance.

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‍Conclusion: Why Invest in Brazil Nut ePPNs?

Sustainable and Profitable Strategy

Investing in Brazil Nut ePPNs means participating in a sustainable agro strategy that not only contributes positively to the environment but also promises attractive returns. The large spread between the raw nut purchase price and sale to wholesale distribution offers a solid profit margin, ensuring the profitability of this venture.

Strong Market Position

With the backing of White Lion Foods, a global leader in the production of Brazil nuts, investors are placing their trust in a reputable and well-established entity. White Lion Foods' strategic market position, cutting-edge processing facilities, and expansive sales network make it optimally positioned to capitalize on the growing Brazil nut market.

Expert Leadership

The leadership team, with its vast international experience, entrepreneurship, and strategic acumen, provides a solid foundation for the successful management of the Brazil Nut ePPNs. Their hands-on approach and commitment to the company's vision ensure that all operations are aligned with delivering the best possible returns to investors.

Attractive Yield with Low Risk

Brazil Nut ePPNs are projected to yield an annual return in the range of 8% to 13%, distributed quarterly. This attractive return, coupled with low downside risks, makes the ePPNs a compelling investment. The limited exposure to enterprise risk of White Lion Foods, and insurance covering the product from storage through delivery, further mitigate risk to investors' principal.

Investing in Brazil Nut ePPNs offers a unique opportunity to participate in the rapidly expanding Brazil nut market, with the potential for attractive returns and a positive impact on sustainable agriculture.