The European Commissioner for International Partnerships, Jutta Urpilainen, the Ambassador of Denmark to the United States, Jesper Møller Sørensen, and Deputy CEO of IFU, Søren Peter Andreasen, today signed a new EU-guarantee (EFSD+) of DKK 535m / EUR 71.7m.
The EU-guarantee is groundbreaking as it will provide downside risk protection for investors in the Danish SDG Investment Fund II, which sets itself apart among impact investment funds focused on developing countries by mobilising private capital for equity investments in private sector companies with positive green and social impacts.
“The Danish SDG Investment Fund II is an excellent example of how we can use public funds as a lever for mobilising private capital that can support the green transition and improve the livelihood of people in developing countries. To reach the global goals it is imperative that we engage private capital, and we are very pleased to assist IFU in this endeavour by issuing a guarantee, which will de-risk the capital invested by private investors in the new fund.”
Jutta Urpilainen, European Commissioner for International Partnerships
The guarantee serves as a loss guarantee for the private investors in the Danish SDG Investment Fund II. This is a new instrument that in combination with a preferred return for the private investors will reduce risk and make greater investments in developing countries more attractive.
“We are very pleased to have received this new EFSD+ guarantee. It is very important in creating comfort for the private investors in the Danish SDG Investment Fund II following a period of economic uncertainty. It facilitates IFU’s ambition to raise a total of DKK 5 billion in the fund for sustainable private sector investments in developing countries and contributing to closing the financial gap for the Global Goals.”
Søren Peter Andreasen, Deputy CEO, IFU
About the Danish SDG Investment Fund II
The Danish SDG Investment Fund II builds on the foundation of the first Danish SDG Investment Fund, which was established in 2018 with a total capital commitment of DKK 5 billion, and which is now fully invested in 27 companies across Africa, East Asia and Latin America. The fund aims to achieve risk-reflective returns for investors that include Danish pension funds and other private institutions.
The fund is a public-private partnership, with IFU contributing 40% and the private investors 60% of the total capital commitment. It has a built-in preferred return and includes a new EU guarantee against losses, which both reduce the risk for the private investors. The expected total capital commitment in first and second closing is DKK 5 billion. IFU is fund manager of the Danish SDG Investment Fund II.
About EFSD+
The European Fund for Sustainable Development Plus (EFSD+) is one of the financing tools of Global Gateway, promoting sustainable investments in the European Union’s (EU) partner countries. Offering a variety of risk-sharing instruments of up to €40 billion, the EFSD+ aims to mobilise up to €135 billion of public and private financing to help partner countries achieve the Sustainable Development Goals (SDGs).