New strategy makes Danish IFU an attractive investment partner

IFU – the Danish Investment Fund for Developing countries – has developed a new strategy that makes it easier than ever to qualify to be an IFU supported company or loan partner. 

 

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Around 30 key members of the Danish business community in Thailand and selected Thai bankers listened on Friday 25 September 2015 attentively to Mr. Tommy Thomsen, CEO of IFU, and Mrs. Deepa Hingorani, who heads IFU’s new Singapore regional office, explain the new strategy of IFU – the Danish Investment Fund for Developing countries. Quiet as mice during the presentations, each one of them seemed busy calculating what this new approach could mean for them and their companies.

Eventually, when the floor was open for questions, a barrage of clarifying questions were put foreward only hastily covered up as general questions regarding the new strategy.

The general purpose of IFU has not changed, Tommy Thomsen explained. It is still an investment fund seeking a return on its equity while at the same time benefitting Danish business interests in developing countries. To succeed with that, IFU needs good project proposals and money.

Money seems to be the least problem. IFU has had an average of 12.5 percent annual return on its investments in the past and has for the past few years successfully implemented a new thematic fund raising strategy whereby IFU is gearing its own generated funds several times over by inviting also pension funds and other mutual funds onboard their projects.

20150925_084219_webEstablishing such a fund, IFU will first use its own equity as the start capital. Additional funds would come from the Danish government. On this platform, IFU would then approach pension funds and other investment funds explaining the profile of this fund and seek to convince them to add to this basic equity, Mr. Tommy Thomsen explained.

Currently, IFU has in this way successfully established The Arab Investment Fund, The Danish Climate Investment Fund, IFU Investment Partners and Danish Microfinance Partners – in the process expanding its own role from being “only” an investment partner to being also a fund manager.

So, good projects, huh?

Yes, currently, IFU is only active in 9 projects in Thailand but has previously been active in another 20 business projects which they have today exited. IFU has this year been active in Thailand in exactly 40 years and this exit strategy has always been part of the concept. Typically, IFU seeks to leave and sell its shares in a project to one of the existing partners after 5 – 8 years. In other countries in South East Asia, IFU is involved in 8 projects in Vietnam and has exited 28, in Philippines 1 project and exited 12, in Malaysia 2 projects active, exited 25, in Indonesia 21 active project and exited 7 and in Cambodia 1 active project and 1 exited. Myanmar 0 projects so far.

This picture will, however, probably change dramatically now that the new strategy of IFU’s involvement is being implemented.

 

The new conditions

First of all, IFU has  increased the upper level of how high a GDP per capita a country can have and still qualify to be a “developing country” in IFU terms. This brings all the South East Asian countries back in the fold – except Singapore.

Secondly, the Danish component in a project no longer needs to be a direct Danish investment by the initiating Danish company. Instead it could be the supply of a key technical component or products that come from one or more Danish suppliers, even simply providing technical advice from a Danish consultant would be enough. Other than that, the project may have an operation and maintenance agreement with a Danish company, or a license agreement with a Danish company. It would even qualify if the Danish company’s role in the project is simply to be the buyer of the produce of the project. In short there has to be a Danish interest in the project.

Apart from the broadened role of the project partners, IFU also now looks at co-investing with other similar development funds from other European countries. On top of the financing provided by the Danish company and/or a local partner IFU will now also assist in obtaining local bank loans and other development aid funding where it is appropriate.

An often overlooked benefit of the IFU involvement is the professionalization of a project.

ifu-20150925_085922_web“Because IFU is a neutral partner, we bring objectivity and independence to the project,” Mrs. Deepa Hingorani stressed. “We go the extra mile, we sit on your board and give our independent operational advice to the project.”

The new IFU Head Quarters for South East Asia was opened only a week ago. Explaining why Singapore was selected, Mrs. Deepa Hingorani explained that an analysis had shown, that not only were there 178 Danish companies registered in Singapore – many of these companies were also regional head quarters for the other subsidiaries operating in the region.

Companies with interesting projects should in Thailand contact local IFU advisors Mr. Jan Dam Pedersen on jandam.pedersen@novanta.asia or Poul Weber, who joined IFU in 1988, on weber@lotus-star.com.

To contact the new regional office director Mrs. Deepa Hingorani, feel free to email her on dhi@ifu.dk

IFU held a briefing at the Royal Danish Embassy on 25 September 2015. From left Jan Dam Pedersen, Thailand representative for IFU, Tommy Thomsen, CEO of IFU, Deepa Hingorani, SEA Regional head of IFU, Ambassador Mikael Hemnitu Winther, Poul Weber, Ifu Representative in Thailand and Asbjorn Overgaard-Christiansen, Commercial Counsellor at the Danish Embassy in Bangkok.

From left Jan Dam Pedersen, Thailand representative for IFU, Tommy Thomsen, CEO of IFU, Deepa Hingorani, SEA Regional head of IFU, Ambassador Mikael Hemniti Winther, Poul Weber, IFU Representative in Thailand and Asbjorn Overgaard-Christiansen, Commercial Counsellor at the Danish Embassy in Bangkok.

 

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