1. Introduction to IFU Investment Fund for Developing Countries
MEGAsteps, Aarhus
Investeringsmuligheder - Indien
4. Juni 2013
Ib Albertsen, Senior Investment Manager

2. Financing in emerging markets poses testing challenges…
Where will you find financing for your planned production site in Ethiopia when your Danish bank looks at you in horror?
How will you manage credit risk and working capital needs to a rapidly expanding customer in Indonesia?
How can you protect yourself from corruption in Bangladesh – one of the most corrupt business environments in the world?
How will you manage transparent decision-making and reporting when co- operating with a Chinese partner who has never been in a partnership with a foreign partner before? 2

3. ECONOMIC OUTLOOK Insert picture in right size Picture format =
Euro Area
-0.6 pct pct. 1.1 pct.
USA
2.2 pct. 1.9 pct. 3.0 pct.
China
7.8 pct. 8.0 pct. 8.2 pct.
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India
4.0 pct. 5.7 pct. 6.2 pct.
Sub-Saharan Africa
4.8 pct. 5.6 pct. 6.1 pct.
Latin America
3.0 pct. 3.4 pct. 3.9 pct.
Source: IMF World Economic Outlook, April 2013
22/09/2018
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4. The markets of tomorrow will be shaped by new players

5. Who is IFU?
IFU is a self-governing fund established in 1967 owned by the Danish government
IFU’s purpose is to promote economic activity in developing
countries and new emerging markets
IFU will advise and invest together with Danish companies in developing countries in commercially viable projects
IFU operates on commercial terms
IFU’s instruments are equity investments and/or loan financing
Annual activity: new investments
20-25 additional investments
DKK 500 – 600m (USD 90 – 110m)
Portfolio: 787 projects/86 countries
223 active

6. Investment countries and offices
Investment limit USD 6,138 (2012)
Others 5%
Beijing
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Cairo
New Delhi
Asia
50%
Accra
Nairobi
Africa
30%
Latin
America
15%
Johannesburg
IFU Offices

7. Examples of IFU’s Danish partners
SME’s
(60%)
Big companies
(40%)

8. Financing – an overview of IFU’s guidelines
Maximum of DKK 100 millions per project, though - Max. 30% of total financing for projects (higher for smaller projects) - Max. matching the Danish Partner(s)
Amount
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Equity
Loans – secured or unsecured
Duration
5-8 years
5-7 years in $, EUR, DKK
Exit
Put/call agreement with the Danish partner at market value
Exit agreement from the start
Repayment, 1-2 years grace

9. What does IFU bring to the table?
Network & expertise
40 years of experience from developing countries and emerging markets
Regional offices in Egypt, China, India, Kenya, South Africa and Ghana
Know-how about local investment conditions
Hands-on during preparation and implementation
Political “insurance”
“Quality mark”
International network of development finance institutions
Financing
Equity and/or loan financing (without recourse to partners)

10. IFU IN INDIA Our team in New Delhi Examples of our partners
Active projects: 19
Total projects ( ): 87
Amount invested: DKK 755.7m
Expected 4-5 new investments annually
Office in New Delhi since 1997
Examples of our partners
22/09/2018
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11. Main opportunities when investing in India
High growth (projected economic growth to surpass 6-7% annually)
Large domestic market - growing middle class population
Increasingly well-educated, yet relatively low cost workforce
Young, ambitious population (64% of its population years)
English speaking
Multicultural
Growth sectors: infrastructure, clean tech, retail, ICT, manufacturing, agriculture

12. Case I – Danish Steelcluster/Rool
Danish Steel, a company engaged in fabrication of metal parts and components, established in 2005 in India
Target Market
Initially only exports, supplying mainly to parent company in Denmark
Now having a diversified customers base with almost 50% local sales in 2010
Has benefited from high growth in Indian market
Set-up in India
Located in Bangalore, South India
Employing a total of 65 people
Managed by a local professional CEO
Total investment of DKK 20m, IFU’s total investment in SC and Loan is DKK 7m
IFU’s Role
Establishment and location advice, start up capital, holding 42.3% of the shareholding in the Company
Additional financing of the company three times since 2006 with cumulative loan of DKK 5.5m
Active participation in the Board, advising on recruitments, regulatory matters, obtaining local financing etc.
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22/09/2018

13. Case II: Orana India Pvt. Ltd. Activity: Production of fruit compounds
Established: 2005
Expected total investment: DKK 11m
IFU’s contracted participation: DKK 0.3m
Calculating carbon savings

14. Main challenges when investing in India
Bureaucracy
Too much paper work!
Political interference in larger projects e.g. infrastructure
Lack of infrastructure
Roads, ports, railways, housing in remote areas, schools
Inadequate power supply
Lack of warehouse space and cold chains
Complicated tax structure and transfer pricing regulations
Different taxes and duties across states
Quality and reliability
Supply chain and business relationships
Labour costs
Increasing wages with only limited increase in productivity
Corruption…

15. Export & Investments – Not conflicting targets
Access to new markets
Creates economic growth at home & abroad

16. What do we require from our partners?
A strong business case
Experience within the industry
Solid management experience
Organisational and strategic commitment
Financial strength

17. Corporate Social Responsibility - CSR
■ CSR self assessment
- Human Rights & Labour Rights
- Occupational Health & Safety
- Environment & Climate
- Anti-Corruption
- Community Development
■ CSR Action Plan

18. Some key lessons learned from investing with Danish partners
Projects require more money than initially thought and take longer to implement
Good idea to approach IFU at an early stage of the project to ensure flexibility going forward
Pay attention to legal issues
Think through the full value chain requirements of your project – often the suppliers and business partners are not there
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19. Ib Albertsen Senior Investment Manager Tel: +45 33 63 75 49 IBA@ifu.dk
How to get IFU involved? – give us a call or send a mail!
Ib Albertsen
Senior Investment Manager
Tel:
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IFU Fredericiagade Copenhagen K Denmark
Tel Fax