CnC-Entobel

pending

Incorporated in 2016, Entobel Holdings PTE (or “Entobel” or “the Company”) is a Singaporean based insect protein manufacturing business with one factory in Dong Nai Province, Vietnam, with a production capacity of 1,000 metric tons (MT)/year of powdered larvae for use in aquaculture feeds. The manufacturing process is designed to be a zero waste (close-loop system). The basic production process, utilizing Black Soldier Fly (BSF) – Hermelia illucens, comprises of culturing the mature BSF to get them to mating, egg harvesting (eggs recycled for next generation of BSF for egg production), growing larvae on food and beverage by-products, drying the larvae, and grinding or pressing (for powder and oil extraction). Entobel’s insect protein products are used as feed ingredients for the aquaculture industry with lesser E&S impacts than traditional sources of aquafeed, such as fish meal and soy-derived products. The remaining material comprising of left-over organic by-product and pupae excrement, known as “substrate”, is bagged and sold separately as organic fertilizer. Entobel’s insects are fed with beverage by-products (primarily brewing residues), which do not divert human food resources. There is also no use of post-consumer waste or manure as input. The proposed IFC investment is to (i) commit Upstream funding of US$2.5mn to prove the commercial viability and cost competitiveness of insect feed production at an industrial scale by supporting the establishment of a 10,000 MT industrial insect feed plant in Ba Ria - Vung Tau province, Vietnam (the “Project”) and to support future international expansion of Entobel. The pilot phase (including construction, commissioning, and testing) is expected to run from March 2022 to June 2025. Final commissioning of the Vung Tau facility is expected by September 2023, following which, Entobel is expected to scale up capacity utilization from ~50% in 2023 to ~100% in 2025. The total project cost amounts to $32.5mn and is co-funded by Mekong Capital and Dragon Capital, who are contributing US$25mn and US$5mn respectively; (ii) negotiate and sign a Collaboration Agreement and Warrant Agreement with the Company for the proposed Upstream engagement, including the right to convert IFC’s US$2.5mn contribution (or warrants) into equity in Entobel within a 5-year period, and a right of first offer (ROFO) to arrange and participate in future debt financing to support the Company in its expansion plans across Asia.