Introduction to IFU
Investment Fund for Developing Countries
Finansieringsmoduler i Skanderborg Randers og Århus - Silkeborg
May 2013
Frank Zimmermann, Investment Manager
1
Financing in emerging markets poses testing challenges…
PAGE 2
•
Where will you find financing for your planned production site in Ethiopia when
your Danish bank looks at you in horror?
•
How will you manage credit risk and working capital needs to a rapidly expanding
customer in Indonesia?
•
How can you protect yourself from corruption in Bangladesh – one of the most
corrupt business environments in the world?
•
How will you manage transparent decision-making and reporting when cooperating with a Chinese partner who has never been in a partnership with a
foreign partner before?
Who is IFU?
• IFU is a self-governing fund established in 1967 owned by the Danish government
• IFU’s purpose is to promote economic activity in developing
countries and new emerging markets
• IFU will advise and invest together with Danish companies in developing countries in
commercially viable projects
• IFU operates on commercial terms
• IFU’s instruments are equity investments and/or loan financing
PAGE 3
• Annual activity:
30-35 new investments
20-25 additional investments
DKK 500 – 600m (USD 90 – 110m)
• Portfolio:
800 projects/85 countries
250 active
Investment countries and offices
Investment limit USD 6,238 (2013)
Others
5%
Beijing
Cairo
New Delhi
Asia
50%
Accra
Latin
America
15%
IFU Offices
PAGE 4
Nairobi
Africa
30%
Johannesburg
Examples of IFU’s Danish partners
SME’s
(60%)
Big companies
(40%)
PAGE 5
Financing – an overview of IFU’s guidelines
Amount
• Maximum of DKK 100 millions per project, though
- Max. 30% of total financing for projects (higher for smaller projects)
- Max. matching the Danish Partner(s)
Equity
Loans – secured or unsecured
Duration
• 5-8 years
• 5-7 years in $, EUR, DKK
Exit
• Put/call agreement with the
Danish partner at market value
• Repayment, 1-2 years grace
• Exit agreement from the start
PAGE 6
What does IFU bring to the table?
Network & expertise
• 40 years of experience from developing countries and
emerging markets
• Regional offices in Egypt, China, India, Kenya, South
Africa and Ghana
• Know-how about local investment conditions
• Hands-on during preparation and implementation
Political “insurance”
• “Quality mark”
• International network of development finance institutions
Financing
• Equity and/or loan financing (without recourse to partners)
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IFU – what we do and don’t do
•
Provide risk capital on commercial
terms – we expect our money back
•
Provide aid or grants
•
Provide sparring and advice in
developing the project
•
Develop or fund feasibility studies
•
Serve as active Board members
•
Provide active day to day
management of project
•
Contribute to sustainable
development (CSR)
•
Non-compliance with host country
legislation and/or int. CSR standards
•
Invest together with Danish
companies abroad
•
Invest with Danes without a
commercial activity in Denmark; i.e. a
A/S or ApS
PAGE 8
Case – West African Fish Ltd., Ghana
Activity: Production of Tilapia fish (aquaculture)
Royal Danish
Seafood Group A/S
IFU
DKK 16.7m
DKK 20.5m
DK
DANIDA
Business
Partnerships
Ghana
Palm Acres
Ltd.
DKK 0.5m
West African
Fish Ltd.
DKK 5m
Danida
Buss.
Finance
PAGE 9
DKK 10m
What do we require from our partners?
• A strong business case
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• Experience within the
industry
• Solid management
experience
• Organisational and strategic
commitment
• Financial strength
Corporate Social Responsibility - CSR
■ CSR self assessment
- Human Rights & Labour Rights
- Occupational Health & Safety
- Environment & Climate
- Anti-Corruption
- Community Development
■ CSR Action Plan
PAGE 11
Some key lessons learned from investing with Danish partners
• Projects require more money than initially
thought and take longer to implement
• Good idea to IFU at an early stage of the
project to ensure flexibility going forward
• Pay attention to legal issues
• Think through the full value chain
requirements of your project – often the
suppliers and business partners are not
there
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How to get IFU involved? – give us a call or send a mail!
Frank Zimmermann
Investment Manager
Tel: +45 30 50 12 13
FZI@ifu.dk
IFU
Fredericiagade 27
1310 Copenhagen K
Denmark
13
Tel. +45 33 63 75 00
Fax +45 33 63 75 99
ifu@ifu.dk
www.ifu.dk