The Investment Fund for Developing Countries, or IFU from its Danish initials, provides risk capital and advice to companies wanting to do business in Africa, Asia, Latin America and parts of Europe. IFU is a self-governing state fund with the purpose of promoting economic and social development in developing countries.
Investments are made on commercial terms in the form of share capital and loans to project companies. Advice is provided from IFU’s head office in Copenhagen and on location through regional offices in Asia, Africa, Latin America and Central and Eastern Europe.
In cooperation with more than 800 Danish companies, IFU has made more than 1200 investments in 100 developing countries. Total investment is close to EUR 160 billion. Annually IFU makes around 50 investments and has on average an active portfolio of 220 investments. IFU is also fund manager for The Danish Climate Investment Fund (DCIF), The Danish Agribusiness Fund (DAF), The Arab Investment Fund (AIF) and IFU Investment Partners (IIP)
IFU is an independent government-owned fund offering advisory services and risk capital to Danish companies wishing to do business in developing countries and emerging markets. Furthermore, IFU is fund manager of a number of other investment funds, such as the Danish Climate Investment Fund, IFU Investment Partners and the Arab Investment Fund.
They are not a provider of aid or business grants. They work on a commercial basis, because they believe that business investment is a good way to create lasting economic improvement.
IFU makes risk capital available in the form of equity, loans or guarantees for project companies established by Danish companies in one of the 146 countries eligible for IFU investment. In addition, IFU acts as an adviser during the establishment phase and a project company’s first few years in operation, typically pulling out when the company can operate on its own.
Advisory services are provided by IFU’s investment managers based in Copenhagen or at one of their regional offices in Africa, Asia and Latin America.
IFU and IFU managed funds have invested in more than 1200 projects in 100 countries. Investments generally produce positive results and have turned out to be good business for all parties involved; for the host country, for the Danish company and for IFU.
Good business for developing countries
Total investments to date amount to DKK 169bn, of which IFU has contributed DKK 18bn. This has helped to create about 550,000 jobs in the host countries. In addition, IFU’s presence has resulted in a transfer of knowledge and technology, the employees have received training and education, and economic activity and a basis of income have been created for the host countries.
IFU also helps to highlight a project company’s corporate social responsibilities of ensuring that employees are given proper working conditions and that a project company’s production is socially and environmentally sustainable.
Positive effects for Danish companies
IFU has co-invested with more than 800 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, becoming able to plan and start up international and more efficient production. In many cases, this has also produced higher revenue in Denmark and stronger earnings.
Profitable return to IFU
Over the years, IFU has had a fair return on its invested funds. Gross yield on share capital has on average been above 12 per cent within the last five-year period. The profit is used to cover IFU's operating costs and for investing in new project companies.
