Introduction to IFU Investment Fund for Developing Countries

Introduction to IFU Investment Fund for Developing Countries Finansieringsmoduler i Skanderborg Randers og Århus - Silkeborg May 2013 Frank Zimmermann, Investment Manager 1

Financing in emerging markets poses testing challenges… PAGE 2 • 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 cooperating with a Chinese partner who has never been in a partnership with a foreign partner before?

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 PAGE 3 • Annual activity: 30 -35 new investments 20 -25 additional investments DKK 500 – 600 m (USD 90 – 110 m) • Portfolio: 800 projects/85 countries 250 active

Investment countries and offices Investment limit USD 6, 238 (2013) Others 5% Beijing Cairo New Delhi Asia 50% Accra Latin America 15% IFU Offices PAGE 4 Nairobi Africa 30% Johannesburg

Examples of IFU’s Danish partners SME’s (60%) Big companies (40%) PAGE 5

Financing – an overview of IFU’s guidelines Amount • 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) 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 • Repayment, 1 -2 years grace • Exit agreement from the start PAGE 6

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) PAGE 7

IFU – what we do and don’t do • Provide risk capital on commercial terms – we expect our money back • Provide aid or grants • Provide sparring and advice in developing the project • Develop or fund feasibility studies • Serve as active Board members • Provide active day to day management of project • Contribute to sustainable development (CSR) • Non-compliance with host country legislation and/or int. CSR standards • Invest together with Danish companies abroad • Invest with Danes without a commercial activity in Denmark; i. e. a A/S or Ap. S PAGE 8

Case – West African Fish Ltd. , Ghana Activity: Production of Tilapia fish (aquaculture) Royal Danish Seafood Group A/S IFU DKK 16. 7 m DKK 20. 5 m DK DANIDA Business Partnerships Ghana Palm Acres Ltd. DKK 0. 5 m West African Fish Ltd. DKK 5 m Danida Buss. Finance PAGE 9 DKK 10 m

What do we require from our partners? • A strong business case PAGE 10 • Experience within the industry • Solid management experience • Organisational and strategic commitment • Financial strength

Corporate Social Responsibility - CSR ■ CSR self assessment - Human Rights & Labour Rights - Occupational Health & Safety - Environment & Climate - Anti-Corruption - Community Development ■ CSR Action Plan PAGE 11

Some key lessons learned from investing with Danish partners • Projects require money than initially thought and take longer to implement • Good idea to 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 PAGE 12

How to get IFU involved? – give us a call or send a mail! Frank Zimmermann Investment Manager Tel: +45 30 50 12 13 FZI@ifu. dk IFU Fredericiagade 27 1310 Copenhagen K Denmark 13 Tel. 63 75 00 Fax 63 75 99 ifu@ifu. dk +45 33