Professional impact investingin the developing countries

jussi.tourunen@finnfund.fi

Vietnam Finland Business forum / 27.5.2019

Finnfund builds

a sustainable world by

investing in responsible

and profitable

businesses in the

developing countries

200 investments in 45 countries

Investees

employ

51,000 people directly

16,000 women

89%of new investments

in 3 poorest country categories

Portfolio

€550 m

€150–200 m

in new

investmentsper year

IRR on investments

Equity

8.2%Total Portfolio

6.6%

40 years

of experience in impact investing

29 %

34 %

24 %

13 %

Funding31 December 2018

Private

Government: equity

Government: loan

Retained earnings

Tailored financing instruments

EQUITY INVESTMENTS

Minority shareholder,

always smaller share than

project sponsor

Agreement to secure

interests

of each counterpart

Usually board membership

MEZZANINE

Instruments to improve

capital structure

Facilitates obtaining of

loans

Preferred shares,

convertible bonds

Maturities up to 15 years,

grace period possible

Collateral e.g. assets of

the project company

Currency EUR or USD

LOANS

• Ticket size EUR 1–25 million

• Greenfield and expansion projects

• Private sector (incl. PPP) investments

48%

26%

10%

16%

Loan Equity Mezzanine Fund

Portfolio by instrument

Margin and risk rating of selected senior loans in energy sector

• Cash-flow positive companies and bankable

projects

• Financial return reflects the risk

In South-East Asia

26% of our portfolio is invested in Asia.

In South-East Asia we have financed all our focus

sectors, i.e. clean energy, sustainable forestry,

sustainable agriculture and financial institutions. In

addition to these, all sectors with significant

development impacts can be considered.

More than 75% of our investments go to the Least

Developed, Other Low Income and Lower Middle

Income countries (according to OECD’s DAC

rating). In Upper Middle Income Countries, like

Thailand and Malaysia, Finnfund focuses on

investments with a strong link to Finnish companies

(as a shareholder, technology provider, turn-key

contractor or other kind of long-term partner for the

project).LDC, LIC, LMIC

UMIC

Renewable

energy

27 %

Sustainable

forestry

19 %

Financial

institutions

18 %

Sustainable

agriculture

4 %

Key industry sectors account for 2/3 of our portfolio

The key direct impacts are monitored annually.

In 2017

6,600 GWhClean energy generated

120,000Household solar systems sold

In 2017

5,730,000Micro and SME loans

33%women

In 2017

867,000 haSustainable forest – of which

814,900 haFSC® certified

In 2017

2 millionFarmers reached

79%women

Thorough but swift

investment process

• Bespoke financing solutions tailored

for each project

• From first contact to agreement

in 6–8 months

• We help investees adhere to international

sustainability standards

• Continuous monitoring and support throughout the

investment period

• Building partnerships with international financiers

and technology suppliers

Thank you!