IFU - Investeringsfonden for Udviklingslande

IFU provides risk capital in the form of equity, loans and guarantees

IFU provides risk capital for companies wishing to do business in developing countries and emerging markets in Asia, Africa, Latin America and parts of Europe.

Our investments are made on a commercial basis, and we offer funding in the form of:

• equity
• mezzanine financing (equity-like loans)
• loans
• guarantees

IFU is an active investor. We have a long-term investment horizon and invest directly in the company that is established in the investment country. Consequently, we share the financial risk with our partner.

IFU may participate both in the creation of new businesses, joint ventures and through the acquisition of existing companies.

Big and small investments

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. Consequently, additional funding of the projects is necessary. This may be through partner funding and for example through regional development banks.

IFU can finance a project with up to DKK 350 million.

Financing for project development

Generally, there are good business opportunities in developing countries and emerging markets. However, very often interesting business ideas are not developed because projects in developing countries are associated with high risks resulting from political instability, uncertain market conditions, legislative and regulatory as well as technical challenges.

On this background, IFU and Danida have established a project development facility of DKK 50m that can co-finance the costs of developing projects. The aim is to reduce the financial risk for IFU partners and developers who want to launch commercial projects in developing countries and emerging markets.

DKK 5m per project
The prerequisite for IFU’s financial participation in the development of a project is that it is estimated that it can become economically viable and bankable in the future and that IFU can expect a return. If so, IFU can contribute 50 per cent of the development costs up to a maximum of DKK 5m per project.

Projects must also be implemented in one of the 146 investment countries that IFU can invest in and comply with IFU’s sustainability policy and general regulatory requirements.

Project must be approved by IFU
Project proposals are treated individually and must include a business idea, perspective and specific costs. The proposals are presented at IFU’s investment committee meetings for final approval.

Focus on larger companies
The target group for the project development facility is large and medium-sized companies. Smaller companies are referred to IFU’s SME facility.

More information
For further information about IFU’s project development facility, contact Vice President Otto Vinther Christensen.

Grants for small and medium-sized companies

Through IFU, Danish small and medium-sized enterprises can obtain financial support for setting up business in developing countries.

Small and medium-sized enterprises (SME) form a large part of Danish industry, but they often lack the necessary resources to make investments in difficult markets. Consequently, Danida and IFU have established an SME facility, which can provide financial support to Danish SMEs wishing to set up businesses in developing countries.

Financial support can be obtained for optimisation of business plans, organisational and managerial development, recruitment, environmental studies, training and implementation of sustainability action plans, for example.

The requirements
To be eligible for financial support, the Danish SME needs to meet certain requirements:

• The investment country must be a DAC country – see list
• The Danish company must meet the criteria for being an SME, which are defined as:
• Less than 250 employees
• A turnover of less than EUR 50m or a balance of less than EUR 43m

Moreover, it is expected that the company can present:

• A clear value proposition for a developing country
• A commercial investment opportunity with an ambition of having IFU onboard as partner
• A relevant track record
• A financial and strategic commitment to the project
• Financial strength matching the planned investment

Approval by IFU
Financial support can only be granted and disbursed when the investment proposal has received a first-step approval in accordance with IFU’s normal appraisal procedure. This approval includes an assessment of the financial sustainability of the investment, and how it meets IFU’s impact criteria.

The support
The maximum financial support for a single project is DKK 1.5m, with DKK 750,000 for the start-up phase and the implementation phase, respectively. The support is granted as a supplement to the company’s own investment and can only cover up to 50 per cent of the actual costs and 25 per cent of the total investment.

How to apply?
Contact Vice President Otto Vinther Christensen or Investment Manager Jesper Kaspersen for further information.