Um bom negócio – A good deal

The physical distance between Karlsruhe, home to German mechan­ical engi­neering company Romaco, and Brazilian pharma­ceutical company Vitamedic’s base in Anápolis, is con­siderable by any measure: 10,000 kilo­metres (most of it the open Atlantic) on the map or a flight of 15 hours or so by plane. Numbers like these soon cease to have any rele­vance in the 21st century though if – as in this case – there is a good deal in the offing.

Vitamedic produces generic pharma­ceuticals for the Brazilian market, the world’s sixth largest, which is already worth approxi­mately US$ 22 billion and con­tinues to grow at a sig­nifi­cant pace. Brazil’s economic en­gine may have been stutter­ing over recent years, but that has not pre­vented more than 40 million Brazilians moving up into the middle class – and demand for pharma­ceutical pro­ducts has in­creased as a result. Generic medi­cines, whose active ingre­dients, like ibu­profen and cetirizine, match those of pharma­­ceuti­cal pro­ducts that have already gained regu­latory ap­pro­val, are effective, thoroughly proven, relatively in­expensive and, there­fore, very popular. Vitamedic’s share of the Brazilian market rose by 11.1 percent in 2018, well ahead of the mar­ket as a whole, and with this trend ex­pected to continue, the com­pany has a com­pelling case for invest­ment and ex­pansion.

“We were very im­pressed with the perfor­mance and ope­ratio­nal relia­bility of Romaco’s equip­­ment and by the technical support they were able to offer us in Brazil,” explains Milton Penna, CFO of Vitamedic’s parent company Grupo José Alves. “The loan from Helaba was extremely important for us,” he continues, “mainly because of the long payment terms and the interest rate, which was much more attractive than the options offered by our local banks.” Vitamedic’s financial resources would not have stretched to the advanced German techno­logy without the rela­tively long repay­ment period of nine years, meaning that it would have had to satisfy itself with less innovative and efficient machinery from local suppliers.

Vitamedic was re­luctant to compromise – and once it had Helaba on its side there was no reason for it to do so. “We took on the role of advisor and bridge-builder to secure the export finance,” Gabriel Steiner recalls. “Our under­standing of the Brazilian market and our know­ledge of the local struc­tures and men­tality proved invalu­able.” The questions that had to be asked in connec­tion with the structur­ing of an export finance deal backed by the German government’s Hermes programme (an export credit guarantee system for exporters and banks) were many and detailed and required a huge amount of dis­cussion and analysis: How are Vitamedic and Grupo José Alves organised, financially and structurally? How good is the company’s credit standing and what are its future prospects? How might the credit risk be ade­quately assessed and how can trans­parency and legal certainty be estab­lished for all of the parties involved?

Pro­viding the best possible support for SMEs like Romaco is a particular priority for Helaba in its capacity as the S-Group bank for the Spar­kassen. New busi­ness in this area often begins with an inquiry to the Spar­kassen thanks to the close contacts they main­tain with SMEs in their district – and so it was with the Vitamedic deal. Kreis­sparkasse Biberach is one of several Sparkassen that work with Romaco along­side Sparkasse Pforz­heim Calw. “There’s a strong foun­dation of trust in our relation­ship with Romaco,” reports Tobias Rommel, Head of Kreis­spar­kasse Biberach’s Inter­national Business depart­ment. He and his team consider it perfectly normal to support their SME customers in all aspects of their inter­national business – after all, inquiries about structured finance of any­thing from € 30 million to € 100 million are not un­common in the small- and mid-cap area and there are cor­porate finance specia­lists ready in-house to respond. Once Romaco had ex­plained to him what it wanted, Rommel wasted no time in bring­ing Helaba on board to help with the loan. “A stand­ard loan contract wouldn’t have been much use,” he says. “Every­one in­volved put enormous time and crea­tivi­ty into the project and Helaba was very prudent in its manage­ment, all of which was essential to achiev­ing the success­ful deal we delivered.”