Finnfund’s investment portfolio grows 80% in two years
Finnfund’s investment portfolio grows 80% in two years
27/04/2011
Finnfund, a development finance company investing in developing countries and Russia, made new investment decisions worth EUR 87 million in 2010. Its investment portfolio expanded 28 percent to EUR 241 million. In two years it has grown by a full 80 percent.
PRESS RELEASE
Fewer investment decisions, substantial disbursements
In 2010 Finnfund made fewer investment decisions but payments for projects remained at the record level of the previous year and the investment portfolio grew rapidly. “During the financial crisis, when commercial finance for projects in developing countries dried up, we made investment decisions at a record pace. This now shows in our disbursements and portfolio,” said Finnfund’s managing director Jaakko Kangasniemi.
The number of new investment decisions in 2010 was 21, worth about EUR 87 million. The figures are smaller than in the two previous years but represent a return to normal after the exceptional level of the crisis years. Among the main target countries were India, Russia and several in Africa.
Projects financed by Finnfund in 2010 included refining recycled materials in India; renewable energy projects in Central America, Sri Lanka and Africa; sustainable forestry in Asia and Africa; the establishment of a payment system based on mobile telephony in Africa; and industrial projects in Ukraine and Russia. Most projects were forerunners in their technology or processes.
Disbursements to new projects totalled EUR 69 million, which was about the same as in 2009. Most payments related to investment decisions made in previous years.
The value of investment assets increased 28% to EUR 240.8 million. Loans and mezzanine instruments accounted for EUR 159 million (66%), equity investments for EUR 38.1 million (16%) and fund investments for EUR 43.7 million (18%).
Financial income decreased
Finnfund’s result for 2010 was a loss of EUR 1.3 million. The negative result was a consequence partly of unusually great write-offs and partly of the low level of capital gains on sales of equity investments in 2010.
Income from financing operations was EUR 12.7 million. Just over half was interest income and the rest consisted of dividends and various financing commissions. Amid world economic turbulence, changes in the fair values of projects were significant in both directions; write-offs totalled EUR 12 million, which was about five percent of investment assets but, on the other hand, assets written down in previous years were revalued upwards by a record amount, EUR 5.5 million. Interest paid, EUR 1.0 million, was substantially less than in the previous year because of the development of short-term dollar rates. Strong growth in operating volume boosted operating expenses 10%.
In 2011 the economic situation of developing countries is improving and will probably be reflected in Finnfund’s operations, too. In sight are project exits and capital gains that are expected to restore the company’s result to a profit.
More capital for expansion of operations
As in the previous year, the government increased Finnfund’s share capital by EUR 15 million in 2010. Another EUR 15 million has been earmarked for this purpose in the budget for 2011. These equity increases provide a good starting point for developing operations this year. The aim is to increase cooperation with Finnish companies, especially in low-income countries and in projects that have excellent development impact.
Finnpartnership business partnership programme
Finnish business partnership programme, Finnpartnership, provides advisory services and financial support for Finnish companies operations in developing countries. It is financed by the Ministry for Foreign Affairs and operated by Finnfund.
Finnpartnership paid business partnership support of EUR 1.2 million for 44 Finnish projects. It received 115 business partnership applications during 2010 and made favourable decisions on 110, worth a total of EUR 4.3 million.
Finnpartnership’s Matchmaking service received 124 initiatives from companies in developing countries.
For more information, please contact:
Treasurer Jyrki Halttunen
tel. +358 9 3484 3318, +358 40 733 6075
Managing Director, CEO Jaakko Kangasniemi
tel. +358 9 3484 3339, +358 40 577 7676
Programme Director, Finnpartnership, Siv Ahlberg
tel. +358 9 3484 3329, +358 50 350 4307
emails: firstname.lastname@finnfund.fi
