danish international investment funds ifu and iØ danish international investment funds the...

DANISH INTERNATIONAL INVESTMENT FUNDS IFU AND IØ

Danish International Investment Funds

The Investment Fund for Central and Eastern Europe

Bremerholm 4

1069 Copenhagen K

Phone: +45 33 63 75 00

Fax: +45 33 32 25 24

E-mail: [email protected]

Website: www.ioe.dk

Piotr Lemieszek and Zbigniew Gluchowski

Warsaw Advisory Office


The Investment Fund for Central and Eastern Europe – IØ

Basic Facts

• Created by Act of Danish Parliament in 1989

• National tie

• Various sectors

• Equity: EUR 230 million

• 400 projects in 18 countries

• 151 active projects

• EUR 640 million invested since 1990

• Countries of operation:

• IØ: Russia, Ukraine and Belarus

• IFU: other CIS

• Phasing out 2009-2012


Principles of investment

• A Danish company shall participate with a larger exposure than IØ’s

• Investments: up to EUR 7 million in one project

• IØ’s investment cannot exceed 30% (50%) of the total investment

• Share capital and/or loan


Equity Investments

• Share capital

• IØ’s exit

- sale to partner (willing buyer – willing seller or put-call options)

- public listing / stock exchange

- sale to third parties (seldom!)

• Subordinated loans

• Equity loans


Loans and Guarantees

• Project loans

- hard currency: DKK, EUR

- commercial terms: 6-months floating rate (CIBOR, LIBOR)

+ a risk premium (2% - 6% for Ukraine)

- up to 5 years

- non-recourse, local collateral

• Guarantees

- commercial terms


400 Projects Distributed by Host Countries 1990-2005

4 3 3 81 4

32

152

15

1

31

148

22

40

1

17

2

2130

0

20

40

60

80

100

120

140

160

Accession Countries: 325 projectsNon-accession Countries: 75 projects


IØ’s presence in Ukraine

• Preparations to establish Kyiv Adviser Office in the 2nd half of 2006

• Advisers:

- Kyiv

- Lviv

• Portfolio of 21 projects (18 active), mostly in Western Ukraine

• Total investments contracted EUR 15 million

• Growing pipeline of projects

• Network of Danish companies in Ukraine


21 projects in Ukraine

• Rapid growth of portfolio in the last two years

• 9 new projects in 2005

• Total investments contracted in 2005 – EUR 4.6m

0

5

10

15

20

25

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Total accumulated number of projects


21 Projects Distributed by Sector

313

5

3

6

Woodprocessing/furniture

Agriculture

Metal processing

Textile

Real estate

DistributionApprox. 20 agri-projects in CEE/CIS incl. 13 in pig production, incl. 3 existing in Ukraine plus approx. 4 in the pipeline


IØ’s typical agricultural project – key figures

Pig production3,000 sows72,000 slaughter pigs p.a. = 5,800 tons of pork p.a. (250-300 such farms would provide the total demand of Ukraine for pork)Turnover: EUR 12 million p.a. 56,000 cubic meters of slurry p.a. 2,400 ha necessary to comply with EU environmental regulationsfarm buildings ca. 60,000 m2Investment budget ca. EUR 10 million

Financing: Equity: EUR 4 millionDanish partner: EUR 3 million

IØ: EUR 1 millionLoans: EUR 6 million Danish partner/banks/IFI : EUR 4 million

IØ: EUR 2 million


• Danish project owner and management• local staff, skills and training• local co-investors, landowners• lease or ownership of land, alternatively slurry contracts

• duration vs. maturity of financing

• structure of ownership, registered titles, concentration• lease or ownership of buildings, collateral• local climate conditions and soil characteristics• CSR, environmental and animal welfare requirements• permits, bureaucracy, inspections• regulatory framework: import tariffs and quotas• VAT on capital investments• import of live animals and inputs• value chain and vertical integration • availability of local bank financing• potential for rape seed and bio-fuels production

IØ’s typical agricultural project – other issues


Thank you for your attention


Legal Mandate

The objective of Denmark's support to Danish investments in Central and Eastern European countries is to assist the reformist forces in these countries in achieving increased economic growth and development of trade and industry as well as to foster closer economic co-operation between Denmark and Central and Eastern Europe for the benefit of the East-West relationship in general as well as Danish business and employment.


Purpose of Operation:

Mission, Vision and Strategy

• MISSION: To enhance global economic growth, development and more equitable income distribution through increased global flow of socially and environmentally responsible, productive investments making optimal use of comparative advantages

• VISION: To contribute through information and advice in connection with co-investments to enhance Danish enterprises’ active participation in the global flow of productive investments towards developing and reform countries.

• STRATEGY: To become known, recognised and used by all relevant Danish enterprises as a competent provider of know-how, experience and external financing as well as their most preferred investment partner in developing and reform countries.


Danish International Investment Funds

sThe Industriali ation Fund for Developing Countries

A group of international investment funds in Denmark

FUND (of which MIØ)

Developing CountriesGNP < USD 2,604 p.a.

Established 1967 1989 (1995) 1996

Geographical Areas Russia, Ukraine and Belarus

Emerging Markets(Asia, Middle East, Latin

America)

. 2005

j vcNumber of ountries hosting

oint entures

.j

pNumber of oint venturesin ortfolio at 31 Dec 2005

n j s Number of ew oint ventureper year

7

)

00 (

547 400 (4 ) 7

72 18 (9 5

2 151 20) 7

30 -- -25 15 20 -

Financial instruments Share Capital / Loans / Guarantees

-Share Capital / Loans / Guarantees

Minimum investment - - -8.0 -iMaximum nvestment ± USD 8.0 million ± USD million

Funds equity at 31 Dec. 2005 Approx. USD 250 million Approx. USD 230 million -


The Investment Fund for Emerging Markets (IFV has stopped making investments in 2004

established at 31 DecNumber of joint ventures

sThe Industriali ation Fund for Developing CountriessThe Industriali ation Fund for Developing CountriesThe Industriali ation Fund for Developing Countries

A group of international investment funds in Denmark

FUND (of which MIØ)

Developing CountriesGNP < USD 2,604 p.a.Developing Countries

GNP < USD 2,604 p.a.

Established 1967 1989 (1995) 1996

Geographical Areas

Established 1967 1989 (1995) 1996

Geographical Areas Russia, Ukraine and BelarusRussia, Ukraine and Belarus

Emerging Markets(Asia, Middle East, Latin

America)(Asia, Middle East, Latin

America)

. 2005

j vcNumber of ountries hosting

oint enturescNumber of ountries hosting

oint enturesNumber of ountries hosting oint entures

.j

pNumber of oint venturesin ortfolio at 31 Dec 2005

jp

Number of oint venturesin ortfolio at 31 Dec 2005pNumber of oint venturesin ortfolio at 31 Dec 2005pNumber of oint venturesin ortfolio at 31 Dec 2005Number of oint venturesin ortfolio at 31 Dec 2005

n j s Number of ew oint ventureper year

7

)

00 (

547 400 (4 ) 7

72 18 (9 5

2 151 20) 7

30 -- -25 15 20 -

7

)

00 (

547 400 (4 ) 7

72 18 (9 5

2 151 20) 7

30 -- -25 15 20 -

547 400 (4 ) 7

72 18 (9 5

2 151 20) 7

30 -- -25 15 20 -

Financial instruments Share Capital / Loans / Guarantees

Share Capital / Loans / Guarantees

-Share Capital / Loans / Guarantees

Share Capital / Loans / Guarantees

Minimum investmentinvestment - - -8.0 -iMaximum nvestment ± USD 8.0 million ± USD millioniMaximum nvestment ± USD 8.0 million ± USD millionMaximum nvestment ± USD 8.0 million ± USD million

Funds equity at 31 Dec. 2005 Approx. USD 250 million Approx. USD 230 million -


The Investment Fund for Emerging Markets (IFV has stopped making investments in 2004(IFV has stopped making investments in 2004

established at 31 DecNumber of joint venturesestablished at 31 DecNumber of joint venturesestablished at 31 DecNumber of joint ventures

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