News

18 December 2003

IFU & IØ’S LEGAL MANDATES, MISSION, VISION, STRATEGY, SUCCESS CRITERIA AND OPERATIONAL GUIDELINES

Below is described IFU & IØ’s legal mandates as well as Mission, Vision, Strategy and Operational Success Criteria and Operational Guidelines as approved by IFU’s Supervisory Board on 18 December 2003.

Questions to these can be answered by contacting IFU:

Telephone: +45 33 63 75 00
Fax: +45 33 32 25 24
E-mail: ifu@ifu.dk.
Letter: Bremerholm 4, 1069 Copenhagen K, DK – Denmark

Legal Mandate for the Industrialization Fund for Developing Countries – IFU (1967):

(Act on International Development Co-operation, 7 June 1967)

For the purpose of promoting economic activity in developing countries, IFU has been created to promote investments in these countries in collaboration with Danish trade and industry.

Legal Mandate for the Investment Fund for Central and Eastern Europe – IØ (1989):

(Act on Support to Danish Investments in Central and Eastern Europe, 14 December 1989)

The objective of Denmark’s support to Danish investments in Central and Eastern Euro­pean countries is to assist the reformist forces in these countries in achieving increased economic growth and development of trade and industry as well as to foster closer economic co­operation between Denmark and Central and Eastern Europe for the benefit of the East-West relationship in general as well as of Danish business and employment.

IFU & IØ’s Purpose of Operation: Mission, Vision and Strategy

MISSION: To enhance global economic growth, development and more equitable income distribution through increased global flow of socially responsible and environmentally productive investments making optimal use of comparative advantages.

VISION: To contribute through information and advice in connection with co-investments to enhance Danish enterprises’ active participation in the global flow of productive investments towards developing and reform countries.

STRATEGY:To become known, recognised and used by all relevant Danish enterprises as a competent provider of know-how, experience and external financing as well as their most preferred investment partner in developing and reform countries.

Approved by the Supervisory Board,
Copenhagen, 18 December 2003

Operational Success criteria for IFU and IØ

Based on their legal mandates, the Funds have formulated a vision, mission and strategy – from which can be derived the following (measurable) success criteria:

Project related success criteria

1. Development impact – measured by:

  • Additionality of the investment to host country
  • Employment impact
  • Transfer of knowledge
  • External and occupational environment impact
  • Code of conduct compliance

2. Partner mobilisation – measured by:

  • IFU / IØ’s relative participation in the project
  • Additionality of IFU / IØ’s participation
  • Capital mobilisation

3. Sustainability and profitability of projects – measured by:

  • Budgets & Accounts for project companies
  • Survival and sustatinability
  • Management quality and competence

Fund related success criteria

4. Efficiency and effectiveness of Fund operation – measured by:

  • Profitability (IRR > 2% p.a.)
  • Efficient cash and cost management
  • Investment size, composition and duration
  • Good corporate governance
  • Partner satisfaction
  • Relative participation in Danish FDI (Foreign Direct Investment)
  • Staff satisfaction

Approved by the Supervisory Board
Copenhagen, 18 December 2003

IFU & IØ’s operational guidelines
The activities in 2004 and henceforth will be implemented in accordance with the new guiding operational principles for IFU and IØ adopted by the Supervisory Board at the Extraordinary Board Meeting on 12 November 2003 as follows:

1. COUNTRY LIMIT
There is no indicative country limit for any country but the country risk shall be currently gauged and a warning signal shall in any event be flagged when the country exposure exceeds 30% of the Funds’ equity plus value adjustments.

2. PARTNER LIMIT
The indicative partner limit is 20% of equity plus value adjustments and the Supervisory Board will, as is the case today, be informed about the current engagement percentage in all projects with the partner.

3. PROJECT LIMIT – ABSOLUTE
The indicative limit for the Funds’ maximum investment in a single project shall be DKK 50m.

4. PROJECT LIMIT – RELATIVE
The Funds’ engagement (loans and share capital) in a single project shall be limited to a maximum of 50% of the balance in projects with a total investment of up to DKK 7.5m and gradually be decreased to 30% in projects with a balance of more than DKK 12.5m.

5. PROJECT EQUITY LIMIT
The Funds equity exposure in any project shall neither exceed that of the Danish partner nor 49% of the total project equity.

6. INVESTMENT MIX TARGET
The Funds shall as an average each aim at obtaining a mix of their investments consisting of 70% equity instruments and 30% senior loan instruments. The Funds’ investments in share capital, equity loans and subordinated loans shall be considered equity instruments.

Approved by the Supervisory Board
Copenhagen, 18 December 2003