Foreign direct investment in enterprises of developing countries has increased in recent years. However, it has been spread unevenly because of the perceived risk, especially in the poorest countries. In numerous low-income countries, enterprises suffer from a shortage of long-term funding that is reasonably priced and risk-tolerant. Like other development finance institutions, Finnfund’s mission is to promote responsible business operations by offering risk finance for projects where commercial finance would be difficult to obtain.
We offer direct investment in the form of long-term investment loans, equity-rated investments and subordinated loans or other mezzanine financing.
Some of our investments are for expanding existing activities, others for establishing entirely new operations. Regardless of the form of financing, Finnfund is always a minority investor – we do not seek a dominant position in the companies we finance.
At the end of 2016, direct investments were 66.2 percent of all investments. Loans were 54.1 percent of direct investments, equity-rated financing was 30.5 percent and mezzanine financing 15.4 percent. Projects were being financed in 27 countries.
During the year we made 17 new decisions on direct investments, totalling EUR 105.3 million.
In addition to providing finance, Finnfund acts as a catalyst for the skills of Finnish companies in developing countries. In 2016 seven new financing decisions were made on projects with Finnish participation. This means that one in three new projects involved a Finnish company.
Finnfund concentrates on working with Finnish companies that have solutions to pressing problems of the developing world and therefore good opportunities in growth markets. The opportunities are often related to clean technology.