IFU - Investeringsfonden for Udviklingslande

IFU invests in financially viable companies, contributing to the green transition as well as economic and social development.

Investments are made on commercial terms in the form of equity and loans. The purpose is to contribute to the green transition, economic and social development in the investment countries and to support the realisation of the UN Sustainable Development Goals.

IFU has invested in 1,336 companies in more than 100 countries in Africa, Asia, Latin America and parts of Europe. Committed investments total DKK 234 billion, of which IFU has contributed DKK 27 billion.

Neither aid, nor business grants
IFU is an independent government-owned fund offering risk capital to companies in developing countries and emerging markets.

IFU is not a provider of aid or business grants. We work on a commercial basis, because we believe that business investment is a good way to create lasting improvements.

Furthermore, IFU is fund manager of a number of other investment funds, including the Danish SDG Investment Fund.

Good business for developing countries
Total investments to date amount to DKK 234bn, of which IFU has contributed more than DKK 27bn. This has helped to create and preserve close to one million jobs in the host countries, and IFU has contributed to the establishment of more than 2,600 megawatts renewable energy. In addition, IFU’s presence has resulted in transfer of knowledge and technology, the employees have received training, economic activity has been accelerated and a source of income through e.g. taxes has been created for the host countries.

All investments must support the green transition and contribute to poverty alleviation and reduced inequality. Furthermore, IFU has a strong focus on the project companies’ corporate social responsibility to ensure, among other things, that employees are given proper working conditions and that a project company’s production is socially and environmentally sustainable.

Invests with Danish trade and industry
IFU has a broad investment mandate and also invests with Danish companies in developing countries. Over time, IFU has co-invested with more than 900 Danish companies. In the vast majority of cases, the project companies established in developing countries have been a success, making a positive contribution to the overall performance of the co-investing Danish company.

The Danish companies have gained access to new markets and at the same time contributed to making a positive difference in the developing countries.

Facts about IFU

Here you can read the answers to some of the frequently asked questions about IFU.

What is IFU’s objective?
IFU’s objective is to contribute to the green transition, economic and social development in the investment countries and support the realisation of the UN Sustainable Development Goals.

What can IFU offer?
IFU invests in financially viable companies in developing countries and emerging markets.

What kind of funding can IFU provide?
IFU makes investments on commercial terms by committing equity capital, loans or guarantees. Investments are made directly in companies in the investment countries.

How much can IFU invest?
IFU can invest up to DKK 350 million per project company. Generally, IFU will be a minority investor and take a 10-30 per cent stake of the total investment. In small projects, IFU can take up to 49 per cent.

Who is eligible for investments by IFU?
Any enterprise wishing to do business in one of the nearly 150 countries eligible for IFU investments.

The requirements are:

• The business operation must be deemed to be commercially viable;
• The investment must contribute to green and social development
• There must be a company in a developing country that IFU can invest in
• The host country must be on the list of developing countries eligible for IFU investment. Click here to see the list.

Can IFU provide additional financing?
Through its close relations with international and local financial institutions, IFU may assist in procuring additional funds for a project.

How many investments have IFU made?
Total committed investments by IFU and IFU managed funds amount to DKK 234bn in 1,336 companies, of which IFU has contributed more than DKK 27bn.

IFU’s annual investments amount to DKK 2bn and involves 20 to 30 companies.

Where does the money come from?
At year-end 2022, total capital under management by IFU was DKK 15.6bn. The capital has been contributed by the Danish State as well as institutional and private investors.

Key figures

Key figures in 2022.

In 2022, IFU and IFU managed funds contracted investments of DKK 1,466m in 20 companies. At the end of 2022, IFU had entered into 1,336 investment agreements in 100 developing countries. As per 31 December 2022, the active portfolio consisted of 166 project companies.

By year-end 2022, IFU and IFU managed funds had entered into agreements of a total amount of more than DKK 27bn, of which more than DKK 20bn had been disbursed.

Financial highlights, IFU:

Tax policy

Since IFU’s investment profits are reinvested in new projects in developing countries, IFU is exempted from paying corporate income tax in Denmark.

The companies that IFU invests in must at all times comply with local tax laws and pay taxes in the country where they have their operations.

IFU may make investments through holding companies domiciled in other countries than Denmark or the country where the project company is domiciled (so-called third countries), when it is commercially motivated and not with the principal purpose of reducing tax on payments from project companies. IFU will not use holding companies in third countries that are on the EU or OECD blacklist (i.e. the EU list of non-cooperative jurisdictions for tax purposes and the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes).

IFU aims to be open about tax. Total reported corporate taxes from IFU’s project companies – split on continents – are published in IFU’s annual report and on IFU’s website. The website also has information on which of IFU’s investments are made through a holding company, including where the holding company is domiciled. In future, when an investment is made through a holding company in a third country, IFU will explain on its website the reason for this structure and how it complies with IFU’s policy on responsible tax.

The Tax Dialogue
The Tax Dialogue is a multi-stakeholder dialogue initiative set up by OXFAM IBIS to understand the challenges and opportunities regarding tax and corporate responsibility in the private sector.

The aim of the Tax Dialogue is to discuss principles for responsible tax and how responsible tax policies can be an integral part of the business plan.

IFU has been part of the Tax Dialogue from the beginning. We think it is important to be involved in the discussion and debate concerning some of the major challenges and risks facing international business in today’s globalised world regarding tax planning.