The mandate of development finance institutions is often described in simple terms: provide long-term capital on reasonable terms while mobilizing private investment to support economic growth. In practice, few transactions manage to achieve both objectives at scale, particularly in capital-intensive industrial sectors. The Arauco Sucuriú financing does precisely that, earning it the Development Finance Institution–Backed Deal of the Year award for 2025.
The transaction supported Chilean pulp and paper multinational Arauco in securing $2.2 billion in financing for the construction of a new greenfield pulp plant in Brazil’s Mato Grosso do Sul state, a project with an estimated total cost of $4.6 billion. The financing structure combined multilateral development capital with export credit support and commercial bank participation, resulting in a package that balanced long tenors, competitive pricing and rigorous environmental and social standards.
At the core of the transaction was a $1.225 billion A/B loan facility led by two multilateral development institutions, which successfully attracted eight international commercial banks into the syndicated tranche. This was complemented by a $970 million loan facility backed by Finland’s export credit agency, reflecting the project’s strong linkages to European equipment suppliers and global supply chains. Together, the facilities created a robust long-term financing solution for one of the largest industrial investments currently underway in Brazil.
Gianfranco Truffello, Arauco’s chief financial officer, says the company carefully evaluated multiple financing routes before opting for a multilateral-led structure for the debt portion of the project. “This structure delivers adequate tenors, grace periods that match the construction timeline and more competitive spreads than other alternatives we evaluated,” he says.
The choice was not only financial. The presence of development finance institutions helped de-risk the project for private lenders while reinforcing governance discipline and execution certainty across jurisdictions. The deal required alignment with Brazilian regulatory frameworks, international lending standards and multilateral environmental and social guidelines, adding complexity but also enhancing long-term resilience.
Strategically, the Sucuriú project plays a central role in Arauco’s geographic and operational diversification. Truffello notes that the new plant will significantly rebalance the company’s production footprint. If today 79% of Arauco’s cellulose output is produced in Chile, that share will fall to 47% once Sucuriú becomes operational. Brazil will account for 41%, with the remainder split between Chile and Argentina.
The participation of development finance institutions also strengthens the company’s ESG profile, an increasingly important factor for both lenders and long-term investors. “Investors who are involved in the project demand high level environmental, social and governance standards that are aligned with our practices and positions,” Truffello says. Environmental licensing, biomass energy integration and social impact mitigation were therefore central to the project’s design and financing.
The investment comes at a challenging moment for the global pulp and paper sector, which has been grappling with excess capacity and depressed prices. Even so, Truffello argues that structural demand trends continue to favor efficient producers. “Pulp and paper is a sector where fundamentals are structurally attractive,” he says. “It is based on a renewable resource whose demand grows as the world progresses towards more sustainable materials that have lower environmental impact.”
In that sense, Sucuriú is both a financing success and a strategic statement: by combining multilateral leadership, export credit support and private capital, the deal demonstrates how development finance can catalyze large-scale, sustainable industrial investment in emerging markets. Its execution sets a benchmark for future DFI-backed transactions in Latin America and beyond.
Arauco $2.2bn Sucuriú Financing
Lenders: Finnvera; IDB Invest; IFC; JP Morgan (coordinator); Santander;
HSBC; CACIB; BBVA; Bank of China; BofA; CCB
Counsel to Issuer: Simpson Thacher & Barlett LLP; PGB (Portaluppi, Guzmán & Bezanilla); Veirano Advogados
Counsel to Lenders: A&O Shearman; PPU (Philippi, Prietocarrizosa, Ferrero DU & Uría); Pinheiro Guimarães; Hannes Snellman Attorneys