General Information  

The Norwegian Investment Fund for Developing Countries, Norfund is a Norwegian development finance institution (DFI) which invests risk capital in profitable private enterprises in most countries of Africa, Asia, Latin America and the Balkans. Any country with a GDP per capita of less than USD 5 290 is eligible for these investments (OECD DAC-list).

Norfund will contribute to the realisation of viable projects which balance economic, social and environmental considerations.

Norfund was established by the Norwegian Parliament (the Storting) in 1997, under special legislation, as a separate legal entity with limited liability. The fund commenced operations in 1998 and has a capital of approx. €330 million. By end 2004 Norfund had 41 investments of which 19 were direct investments, 18 fund investments, 4 strategic investments.

The institution can provide equity, quasi-equity and loan finance for business expansions, corporate restructurings, management buy-ins and buy-outs, and new business ventures. It invests in most sectors of the economy, providing the investment offers opportunities for growth, profitability and sustainable development.

Norfund has established two global subsidiaries to increase the scope and scale of its investments. Aureos Capital is Norfund's joint venture fund management company, while SN Power Invest is its strategic joint venture in the renewable energy sector.

Instruments

Equity

Norfund offers private equity to businesses with a high growth potential. It invests fresh capital directly in companies and financial institutions, and indirectly through local and regional investment funds. Norfund’s participation and willingness to accept risk attracts other development finance institutions (DFIs) and investment companies.

Although Norfund can provide up to 49% of the total capital for a project in special cases, it normally subscribes 10-35% of the funding. By adopting a long-term position, the institution aims to exit from a project after three to seven years, having contributed actively to establishing every investee as a viable and healthy business.

Quasi-equity

Norfund can offer quasi-equity products with a combination of loan and equity features. These instruments make it possible to find flexible solutions which meet the special requirements of each project. Quasi-equity products include convertible loan instruments, unsecured loans, preference shares, and subordinated loans.

Loans

Norfund can provide private companies and financial institutions in developing countries with a variety of loan instruments. The institution takes a long-term view, and the typical loan maturity is three to eight years. The financial strength of Norfund and the long-term position it adopts often attracts other investors to projects which would normally struggle to secure funding from private investment institutions. Norfund has the mandate and the willingness to take risks in its operational markets, but does not assume more risk than the project sponsor. Lending instruments include: Senior loans, project finance facilities, syndicated loans, mezzanine finance.