An active year for Finnfund – fast growth of activity in a world paralyzed by financial crisis
20/04/2009
Finnfund’s operations showed strong growth in 2008. Amid conditions of financial – and subsequently economic – crisis, a development finance institution like Finnfund has an accentuated role in promoting economic development in developing countries. Indeed, last year saw a record number of new investment decisions, which totalled EUR 116 million. The investment portfolio grew to EUR 135m. Nonetheless, turbulence also struck Finnfund projects; investment write-offs were exceptionally high, contributing to a result that is significantly below the record level in 2007.
Press release 20 April
Record number of new investment decisions
Finnfund’s result for 2008 was a profit of EUR 3.3 million. The result is notably weaker than in 2007, but satisfactory in the prevailing financial and economic crisis. The lower result reflects the difficult conditions in which Finnfund and its customers were operating.
The year was busy and fruitful. More investment decisions were made than ever before in
a single year; 28 decisions worth about EUR 116 million. The main target countries included India and China but some new investment decisions were also made for Africa and Latin America. Among its investments, Finnfund financed the expansion of a pharmaceuticals plant in Kenya, the construction of a mobile phone network in Namibia, engineering workshop investments in China and India, steel strap manufacturing in Russia, a small hydropower plant in Central America and SMEs in Bosnia.
Disbursements of EUR 41.8 million were made for new projects, about 63% more than the year before. Of this total, EUR 29.5 million were loans and mezzanine instruments, EUR 8.8 million were investment in funds and EUR 3.5 million were equity investments.
Extra share capital to enlarge operations
Income from financing operations was EUR 14.2 million, of which about a half was interest income and a half consisted of dividends, capital gains and various financing commissions. Investment write-offs totalled EUR 8.1 million, about 6% of the value of investments at the end of the year. The amount is distinctly greater than average. Write-offs made during previous years were cancelled by a total of EUR 6.2 million, so the net effect on the result was a negative EUR 1.9 million.
Finnfund’s investment portfolio increased 15% in 2008 to EUR 135 million.
Finnfund’s share capital was increased during 2008, for the first time since 1996. The increase was about EUR 15 million. Another EUR 15 million for share capital increase is allocated in the 2009 state budget, and further share capital increases are planned in the coming years.
The balance sheet at the year-end was strong, despite the difficult operating climate. The solidity ratio was 63% and liquidity about EUR 63 million. A strong balance sheet and good liquidity form a good basis for 2009.
Finnpartnership business partnership programme
Finnpartnership is a programme for promoting business partnerships, financed by the Ministry for Foreign Affairs and administered by Finnfund. It offers Finnish companies advice and economic support related to business operations in developing countries.
In 2008 Business Partnership Support of EUR 1.5 million was reimbursed for 61 Finnish projects. Finnpartnership received 93 business partnership applications during 2008. Support was granted for 68 projects, totalling EUR 3.6 million. Finnpartnership’s matchmaking service forwarded 23 initiatives to Finnish companies.
For more information, please contact:
Jyrki Halttunen, Treasurer, tel. +358 9 3484 3318
Jaakko Kangasniemi, Managing Director, CEO, tel. +358 9 3484 3339 forename.surname@finnfund.fi
