Meet a member of A2i: IFU
In 2023, IFU, the Danish Investment Fund for Developing Countries, became a member of Access2innovation (a2i).
The decision reflects IFU’s commitment to fostering sustainable development and economic growth in developing countries, aligning with its core mission of investing in financially viable companies that contribute to the green transition and social development.
Reform of IFU will push investment volume by billions
IFU has a strong track record of investing in Africa supporting private sector companies within green energy and infrastructure, healthcare, sustainable food and financial inclusion.
A newly adopted reform of IFU will increase further funding with around DKK 15 billion and double IFU’s capital under management towards 2030. Consequently, the annual investment level will grow significantly, and over the period 2024 – 2030 investment volume in Africa is expected to reach DKK 7 – 8 billion.
Anders Frigaard, Investment Director at IFU, emphasizes two primary elements of IFU’s involvement with a2i: a commitment to the ecosystem and a concrete hope for future investments stemming from a2i’s ongoing projects. He highlights IFU’s inclination to collaborate with Danish businesses seeking investments in developing nations. This is driven by IFU’s ambition to engage in more ventures with Danish companies and benefit from a2i’s initiatives to generate opportunities for investments.
IFU’s membership in Access2innovation signifies a strategic alliance geared towards sustainable development, economic growth, and green innovation. As the collaboration evolves, the impact on both Danish businesses and developing nations is expected to pave the way for a more green, just and inclusive global economic landscape.
Now with venture money
One notable development on the horizon is IFU Impact Ventures, scheduled for launch this year. This venture will allow IFU to delve into projects with higher risks, including new technologies and early-stage investments. The initiative presents an opportunity for IFU to explore untapped sectors and contribute to innovation and sustainable development.
IFU’s collaboration with a2i has already yielded valuable networking opportunities, including participation in A2i Talk on venture solutions. IFU is eagerly awaiting promising leads from the association, further validating the decision to join a2i.
Some advice to businesses looking into the African markets
Anders Frigaard’s advice to businesses considering venturing into developing countries is insightful. He emphasizes the importance of integrating into existing value chains. Presenting a product or solution with the ambition to develop a new value chain – both on supply and demand side – will often fail. Instead, he advises new market actors to look at value chains already existing at the market – and consider how the company’s products or services can improve the established system. This approach improves the chances of getting success in unfamiliar markets.
IFU in short
As of now, IFU – The Danish development finance institution – boasts a diverse portfolio, with 166 investments worldwide. Since inception, IFU has made over 1,300 investments across more than 100 countries in Africa, Asia, Latin America and Europe. This makes IFU Denmark’s most experienced investor in developing countries.
The investments have not only generated substantial returns but also created and sustained more than a million jobs, facilitated the establishment of over 2,600 megawatts of renewable energy, and facilitated knowledge transfer and technology exchange.
IFU operates as a bridge between private sector companies and developing countries providing risk capital in the form share capital and loans. IFU has co-invested with more than 900 Danish companies over the years. These collaborations have not only opened new markets for Danish enterprises but have also positively impacted the host countries.
IFU is state owned but is also managing public – private investment funds including The Danish SDG Investment Fund established in cooperation with large Danish pension funds and private investors.
In terms of funding, IFU manages DKK 15.6 billion as of the end of 2022, sourced from the Danish State, institutional investors, and private investors. IFU can invest up to DKK 350 million per project company, with a focus on being a minority investor.
Who is considered for investment?
IFU’s criteria for investment are stringent and clear. Any potential project must be commercially viable and provide a positive impact in the regions it invests. The investments are made on commercial terms, distinguishing IFU from traditional aid organizations
Anders Frigaard
Investment Director of IFU.