Finnfund

AFRICAP, AFRICA 

The AfriCap Microfinance Fund is an African microfinancing pioneer in many respects. Established in 2001, it was the continent’s first equity fund dedicated to microfinancing. AfriCap has also set an example for private financing of the microfinance industry.

AfriCap invests equity capital  in  microfinance institutions across Africa, which in turn provide credit and deposit services to their low-income customers.

Among the first investors in AfriCap were European development finance institutions and NGOs specializing in microfinance. However, the Fund’s aim from the outset was also to attract private investors.

Finnfund participated for the first time in AfriCap’s recent second round of investment, which raised about USD 30 million and boosted total capital to USD 50 million. At the same time AfriCap transformed itself into a permanent capital investment company, changing its name to AfriCap Microfinance Investment Company.

Finnfund hold 6.1 percent of the new company’s capital stock. The major shareholders are the European Investment Bank (EIB) with 14.6 percent and two private growth funds, Nordic Microcap with 12.2 percent and Blue Orchard Private Equity Fund with 10.2 percent. Other shareholders include the Dutch development finance company FMO, Sweden’s Swedfund and Norway’s Norfund.

So far, AfriCap has invested in 14 institutions in thirteen countries. Its portfolio is extremely diverse, stretching from Egypt to South Africa and from Senegal to Madagascar.

It is currently exploring new investment opportunities in these and other countries and intends to expand its portfolio with 20 investments during the next five years.

In addition to providing equity, AfriCap offers advisory services to the microfinance banks that it invests in, helping them develop their operations and governance. It also seeks to utilize new technology in reaching the very lowest-income customers.

CLEAN GLOBE INTERNATIONAL. RUSSIA

Clean Globe International’s project to establish oil spill recovery centres is making progress in Russia. The first regional centres are beginning operations in the first half of 2008, in such areas as Sahal, Yugra, Murmansk and Primorsk.

There is increasing demand in Russia for comprehensive services to combat oil spills. Environmental awareness is growing and wealthy oil producing companies are paying increasing attention to solving and preventing environmental problems in production areas and oil ports.

Clean Globe International (CGI) is a Finnish company that provides services related to waste management  and land decontamination, as well as oil spill responses. The new regional centres provide a channel for other Finnish environmental exports to Russia. Many Finnish SME’s have made remarkable innovations but lack the resources to market and sell their products.

CGI is part of Finland’s Lamor Group, an expert in oil spill recovery and environmental services and a world market leader in the field. Russia has been an important target for Lamor exports for several years.

CGI’s project to expand its presence in Russia is being financed by loans from the European Bank for Reconstruction and Development ERBD (EUR 30.5 million) and Finnfund (EUR 10 million). The EBRD, Finnfund and the Nordic Environment Finance Corporation NEFCO are also making equity investments. The equity investment decisions taken so far will give them a 35-percent holding in CGI.

CGI aims to apply the new concept it has developed for Russia in other countries, too. The need for better responses to oil spills is a universal one.

PRECISION AIR, TANZANIA

Africa is being swept by a new generation of airlines offering efficient and reliable service. One of these is Precision Air of Tanzania, which has been rapidly expanding its route network over the past few years, both at home and in the region.

Precision Air’s fleet currently consists of seven ATR aircraft with 42-72 seats. Passenger demand is steadily rising and the company has decided that by 2011 it will acquire seven new craft seating up to 100. Some of these will replace its existing aircraft.

Capital spending will amount to about 120 million dollars. Finnfund is providing credit to finance the investment, which is also backed by European Financing Partners, a joint vehicle formed by European development finance institutions and the European Investment Bank.

In its financial year ending March 2006, Precision Air carried some 425 000 passengers. It believes that, with its new aircraft, the number will rise to 600 000 per year. Fleet modernization is an important competitive advantage in a business where the key issues are cost effectiveness, reliability and safety.

Of Precision Air’s stock, 51 percent is owned by a Tanzanian businessman, Michael Shirima, an established aviation figure. The other shareholder is Kenya Airways, one of the continent’s most respected aviation companies.

Precision Air now serves 15 destinations. The route network links all major cities in Tanzania, including Lindi in the south of the country, long a target of Finnish development cooperation.

WEST COAST PAPER MILLS LTD, INDIA 

India is experiencing fast growth in demand for paper products and the production capacity of its forest industry is increasing apace. Finnfund is participating in the development of the sector by investing in a mill project that will make West Coast Paper Mills Limited (WCPML) one of the largest papermakers in the country.

The mill, located in Dandeli in the state of Karnataka, produces paper for writing, printing, wrapping and packaging. The investment of about USD 250 million will double its production capacity to 320 000 tonnes per year.

Among the other organizations financing the project alongside Finnfund are the International Finance Corporation IFC, part of the World Bank group, and two Indian banks, ICICI and the State Bank of India.

In the first phase of the investment programme WCPML is building a new fibre line for its pulp mill, which is believed to be the largest single fibre line in India. The equipment comes from Metso Paper and uses the best available Finnish environmental technology.

By the end of the decade MCPML will have boosted its capacity further by building a new paper machine, a power plant and other improvements at Dandeli. The investments will boost the quality of products manufactured but will also curb emissions to air and water and lower the amount of solid waste produced.

Growth of India’s forest industry is being held back by a shortage of domestic feedstock. West Coast Paper has developed a wood procurement system that will allow its plant to obtain the bulk of the wood it needs from plantation forests in the vicinity. Its purchases will provide work for thousands of local farmers.

The company has paid close attention to managing the environmental and social effects of its chain of procurement.

MANTSINEN GROUP, RUSSIA

The Mantsinen Group enjoys a good reputation for its special cranes and machinery designed for handling bulk cargo. Now the company’s activities have rapidly expanded from manufacturing machinery to full logistic solutions for materials handling.

The greatest growth comes from Russia. Last year, almost 30 per cent of Mantsinen’s EUR 44 million net sales came from Russia. Finnfund is a financier in the company’s expansion of its Russian operations.

For a Finnish SME, Mantsinen has chalked up solid experience of the Russian market. Its first customers there were Stora Enso and Metsäliitto. Mantsinen is responsible for handling wood and planning logistics at their rail terminals.

More recently, Mantsinen has expanded its activities to ports, the Ust-Luga Port being one such contract.

The third phase of the company’s expansion in Russia has brought on board Russian customers. Local sawmills and pulp mills are just some of the Russian organisations that are stepping up their operations by outsourcing materials handling to a specialist in the sector.

In summer 2006, Mantsinen signed a contract with OAO Segezha Pulp and Paper Combine in Russian Karelia; the Finnish company unloads and transfers wood arriving at the mill’s wood yard. It handles around 100,000 cubic metres of wood each month.

The Mantsinen Group has a subsidiary in St Petersburg. The company currently has 16 ongoing contracts in and around St Petersburg and Novgorod, and in Russian Karelia.

One indicator of the scale of expansion of operations is that around 300 of the Mantsinen Group’s 530 employees work in Russia.

The background to Mantsinen’s success lies in the innovative combination and customisation of products and services in line with customer requirements. This simplifies wood processing, cuts back on the amount of processing required and improves the feedstock conversion rate. The new model also places less burden on the environment.

OBAJANA CEMENT FACTORY, NIGERIA

The Obajana cement factory now under construction in Nigeria will considerably boost the self-sufficiency of Africa’s most populous nation with regard to cement production. Along with increased oil revenue, the country’s construction industry is undergoing robust growth but thus far, most of the cement, one key construction material, has had to be imported from abroad.

When it reaches completion, the cement factory under construction 220 kilometres southwest of the capital, Abuja, will be the largest in sub Saharan Africa. Dangote Industries Limited, the largest private industrial group in Nigeria, is investing in the construction.

Besides local financiers, the project also involves several international development financial institutions, such as the Netherlands Development Finance Company (FMO), DEG – Deutsche Investitions und Entwicklungsgesellschaft mbH of Germany, Swedfund from Sweden as well as the European Investment Bank (EIB) and the International Finance Corporation (IFC), which is part of the World Bank Group. Finnfund’s role is to act as one of the lenders for the project’s development funding.

The combined value of the investment, which will reach completion in the latter half of 2007, will soar to more than 1 billion US dollars.

The major risks associated with the cement factory project are linked to Nigeria’s economic and political development. The State, which has endured military dictatorships, ethnic violence and corruption, has shifted over to democracy. However, the Government of the country has several challenges on its hands to deal with, including the eradication of poverty.

OOO VOLGASTRAP, RUSSIA

Russia is experiencing a strong increase in demand for steel strapping used for packaging. Finnfund is providing an investment loan and equity for the plant, which is the first production facility to produce high-quality steel strapping in the country. Until now, packaging materials have had to be imported from abroad.

OOO Volgastrap is situated 350 kilometres northeast of Moscow in the city of Kostroma.

The Finnish-owned Specta Group AG, which is a leading supplier of transport packaging and machinery for the metal and wood processing industry in Russia, is the major investor in the project. The total value of the investment is EUR 17 million. Besides Specta and Finnfund, financiers include Swedfund, Sweden´s risk capital company for investments in developing countries, and International Moscow Bank.

OOO VolgaStrap manufactures steel strapping to bind steel coils, sheets, pipes and sawmill products. The plant’s trial run started at the end of 2006 and it went into actual production at the start of 2007.

The production facility covers 11,000 m² and it employs 100 people; it will have considerable impacts on employment in the poor Kostroma Oblast.

Steel strapping is used especially in the forest and metal industries. Elsewhere in the world, the use of plastic strapping is becoming widespread but because transport conditions in Russia make for heavier demands on packaging, steel strapping is set to retain its strong position as a packaging material.

Specta has its own distribution network of 14 offices in the major industrial regions of Russia and Ukraine. The company was not previously engaged in production itself; rather, it imported packaging machinery and materials from countries such as Finland, Sweden, Central Europe and Greece.

CENTRAL AMERICAN RENEABLE ENERGY AND CLEANER PROCUCTION FACILITY

The Central American Renewable Energy and Cleaner Production Facility (CAREC) is a fund that promotes renewable energy and energy efficiency. It primarily focuses on SMEs in Central America.

The fund amounts to 17 million US dollars. CAREC was initiated by its key investor, the Inter-American Development Bank (IADB) from Latin America. Alongside Finnfund, other financiers include the Central American Bank for Economic Integration (CABEI), BIO, the Belgian Investment Company for Developing Countries and Triodos Renewable Energy for Development Fund from the Netherlands. The fund is managed by E+Co Capital Ltd.

CAREC’s investments in renewable energy, stepping up energy efficiency and cleaner industrial production projects are also important from the perspective of the national economies of Central American countries because energy production in the region is largely dependent on expensive imported oil.

Central America has vast potential for harnessing hydropower, solar and wind power, but making more efficient use of these sources calls for new channels of finance.

Since CAREC’s investments also reduce carbon emissions, the fund will have the potential to generate additional revenue from trading emission credits.

For Finnfund, CAREC is a good channel for investing in environmentally friendly energy projects within the SME sector in Central America, which would otherwise be difficult to access in order to make direct investments from Finland. The fund is also an avenue for gaining valuable information about the markets in the region and the development of the private sector.

The promotion of the use of sustainable forms of energy in Central America is also a key objective of Finnish development cooperation. The Energy and Environment Partnership with Central America (EEP), which promotes concrete projects, has been signed between Finland and seven countries in the region.

KILOMBERO VALLEY TEAK COMPANY, TANZANIA

In a large part of Africa, forestry is mostly synonymous with the destruction of natural forests. It destroys environmental values and contributes little to economic development. There is practically no sustainable forestry to speak of, despite the tremendous potential in several countries.

Kilombero Valley Teak Company (KVTC) in Tanzania is pointing the way to sustainable forestry. The teak plantation was established in 1993 by the British development financier, Commonwealth Development Corporation (CDC). Finnfund became its shareholder in 2000. Finnfund’s contribution was crucial in terms of continued investments into the project. Teak now grows in an area of around 7,500 hectares and new plantings are carried out at a rate of 650 hectares per annum.

Activities on the plantation comply with the principles of sustainable forestry, and have been certified. A large part of the land managed by the company is protected and teak is planted only in areas where it thrives best. The company supports the inhabitants within its area in many ways. It has for example financed schools and health care.

Teak is a valuable tropical hardwood that grows in natural forests mainly in Myanmar. Teak plantations can be found in different parts of the world. The estimated rotation for teak growing on the plantation at Kilombero is 32 years. Thinning got underway last year and in 2007, investments will be made into a sawmill and other secondary processing to utilise the thinning yield.

KVTC now provides jobs for several hundred people in one of the poorest areas in Tanzania. When harvesting and processing get into full swing, several thousand jobs will be generated directly and indirectly. In addition, the expertise developed by KVTC and the seedlings it distributes have made teak familiar to thousands of small-scale cultivators. When the wood trade and processing get up and running in the years ahead, teak looks set to become an important crop plant for the area and a major export product for Tanzania.

ZAO IZHMA REINDEER MEAT, RUSSIA 

Finnfund is participating in the development of reindeer husbandry in poor regions of the northern parts of Russia, where the actors involved in the livelihood have joined forces in order to revive the traditional source of income for indigenous peoples.

The keys to improving the viability of sustainable reindeer husbandry lie in processing meat into end products and marketing them effectively. ZAO Izhma Reindeer Meat, which started operations in the Komi Republic, is the joint venture of the Finnish company Kometos Oy from Kauhajoki and local reindeer herders and businessmen. It specialises in the slaughter of reindeer and meat processing. Finnfund is participating by providing financing to a sum of approximately EUR 2.5 million.

Kometos has supplied modern slaughterhouses to the northern regions of Russia since the early 1990s. ZAO Izhma Reindeer Meat’s plants have the capacity to handle 500-600 tonnes of meat a year, about 60 per cent of the reindeer slaughtered in the Komi Republic.

In addition to investments in equipment, ZAO Izhma Reindeer Meat is training its employees to become professional meat processors. In order to maintain the balance of reindeer husbandry, which is still practiced according to traditional ways, the joint venture will not interfere with the livelihood itself.

Reindeer husbandry has been up against tremendous difficulties in Russia in recent years. State support for reindeer herding kolkhozes collapsed along with the break-up of the Soviet Union. Unemployment in the northern regions has worsened along with the crisis and social problems have become acute. Reindeer husbandry is also plagued by damage to the environment.

ACCION INVESTMENTS, LATIN AMERICA

Finnfund started cooperation in 2004 with ACCION International, a world pioneer in microfinance. ACCION is a private, nonprofit organization with the mission of giving people the financial tools they need – microenterprise loans, business training, and other financial services – to work their way out of poverty.

Finnfund is party to ACCION Investments in Microfinance, an investment company established by ACCION International. The investment company’s capital is 19.5 million US dollars, of which Finnfund’s stake comes to 1.5 million US dollars. ACCION Investment’s guiding principle is to provide equity and quasi-equity financing to local microfinance institutions in Latin America, the Caribbean and Africa. In addition to financing ACCION offers its partners technical assistance to put their operations on a stronger footing.

ACCION Investments has invested in financial institutions specialising in microfinance in Ecuador, Paraguay, Peru and Bolivia. Besides financing, partners receive expert assistance to support sustainable and commercially viable financial management.

During its 30-year history of microlending, ACCION International has created an extensive network of cooperation that spans 13 states in Latin America and the Caribbean as well as seven African countries. The portfolio for the microfinance institutions in the network comes to around 680 million US dollars. Clients number more than 1.4 million poor borrowers.

CELTEL, AFRICA 

Mobile markets in Africa are continuing to soar. Sales of new mobile phones in 2004 shot up by about 30 per cent on the previous year. The growth prospects for teleoperators in Africa are equally staggering.

“The number of new subscribers is growing by 50,000 a week,” says Marten Pieters, Chief Executive Officer of Celtel International, one of Finnfund’s partners.

Celtel is one of the largest mobile phone operators in Africa. The number of subscribers to the company rose in December 2004 to five million. The teleoperator is rapidly expanding its operations and Finnfund is also playing its part in financing new investments.

Celtel is a longstanding client of Finnfund. Cooperation presents the opportunity to provide financing for several mobile phone operators in one go and to gain valuable insight into the telecommunications sector in Africa.

Celtel currently operates in 13 African countries. Of the continent’s 800 million population, 50 million use a mobile phone, so cell phone penetration there is still extremely low.

The people who are benefiting most from the expansion in wireless connections are those who have had absolutely no access to communication tools. Mobile markets are now being swelled by people who at one time were unable to afford phones and pay for phone calls.

COMPAÑIA FORESTAL ORIENTAL, URUGUAY

The purposeful emphasis given to the sustainable development of the forestry sector in Uruguay is beginning to bear fruit. Alongside increased export revenues, commercial afforestation has created numerous new jobs in the poorest departments of the South American country.

Due to the favourable impacts on development, Finnfund has financed investments in the forestry sector since the early part of the 1990s. Finnfund granted a supplementary loan of 7 million US dollars to Compañia Forestal Oriental S.A. (FOSA) in 2004 to extend its eucalyptus plantations. The major shareholders in the company are the Finnish pulp producer Botnia and the paper manufacturer UPM.

FOSA began harvesting in 1998 and within a few years, the company rose to become Uruguay’s largest roundwood producer. In 2005 Botnia and UPM announced that they will establish a 1 million tonne pulp mill in Uruguay. Ensuring raw materials will call for FOSA to double its current plantation area.

The government of Uruguay has resolutely supported development in the forestry sector since the 1980s. Along with increasing the number of jobs and export revenue, painstaking effort has gone into sustainable methods for afforestation and harvesting. FOSA plantations have been certified as meeting Forest Stewardship Council (FSC) standards.

According to a study published by Yale University in January 2005, Uruguay’s capacity places it third in the world for sustainable environmental development. Only Finland and Norway are listed ahead of Uruguay.

DETECTION TECHNOLOGY, CHINA 

The Finnish company Detection Technology Oy produces super-sensitive detectors for x-ray scanning equipment used in hospitals and on security equipment in airports. The company in Ii, near Oulu, started its operations in China back in the mid 1990s. The expansion of operations in Beijing is now underway. Finnfund is involved by providing finance to the sum of EUR 1 million for the new design and assembly unit that will be ready towards the end of 2005.

As with many other sectors, the most dynamic growth in the security industry is in the Far East, where Detection Technology also has a strong commitment.

“The demand for state-of-the-art technology needed for the security industry and health care is rapidly gaining pace around the world,” says Mikko Nuutinen, Detection Technology’s CEO.

Besides Beijing, Detection Technology has also had a production unit in Hong Kong since 1999. Now production is transferring to mainland China. Of the more than 60 people on the company’s payroll, 40 per cent are Chinese.

The 2008 Beijing Olympics will cause a surge in the security industry markets in China. Before then, the country is to introduce x-ray scanners at thousands of bus stations and other places. Meanwhile, old equipment in Europe and North America is being replaced by faster and more accurate technology.

X-ray technology is also being increasingly applied to new sectors. One of these is the foodstuffs industry, where x-rays can be utilised to detect foreign objects such as bone splinters in meat packages.

A.T. BIOPOWER, THAILAND

Rice is Thailand’s most important agricultural product, but the husks that are separated out from grains of rice have become a major environmental problem for the country. Properly treated, the by-products of grain production can nevertheless also be a viable and environmentally friendly source of energy.

The business idea of A.T. Biopower, a Thai joint venture, is based on making use of husks to generate electricity. The company is owned by Chubu Electric Power Company of Japan, Flagship Asia Corporation of Malaysia, Al Tayyar Energy Ltd. of the United Arab Emirates and Britain’s Rolls Royce Power Venture. The Finnish partners in the company are Private Energy Market Fund, which finances investment projects in the energy sector, and Finnfund, with an interest of about ten per cent.

The biofuel power plant is located in central Thailand near the city of Pichit. Electrowatt-Ekono, a part of the Jaakko Pöyry Group, was in charge of delivering the power plant, which cost about 20 million euros.

Burning husks in a modern power plant is an environmentally sound way of generating electricity. The even-quality ash that arises in the process is sold to industry as a raw material. Apart from its environmentally friendly aspects, the use of husks also brings additional income to the poor rural population. A.T. Biopower will pay rice mills the fair price for the husks. The incineration plant and transporting of the husks will furthermore offer new jobs.

ST. PETERSBURG SOUTHWEST WASTEWATER TREATMENT PLANT, RUSSIA

Construction of the St. Petersburg Southwest Wastewater Treatment Plant has got up to full speed. Apart from its positive ecological impact, the project also features a unique financing model. The project is to be implemented on the basis of the Public Private Partnership (PPP) model, with both public and private lenders taking part in it.

The special purpose company Nordvod was established for the implementation of the wastewater treatment plant. The share capital for Nordvod has been put up by Vodokanal – the St. Petersburg water company – and the Nordic construction companies YIT, Skanska and NCC in conjunction with the Nordic Environment Finance Corporation (NEFCO).

With a price tag of about 128 million euros, the contract will be financed with equity capital, credits, grants and local funding. The Nordic Investment Bank, NIB, is the lead bank for the bank consortium in charge of the financing. The financing consortium comprises the European Bank for Reconstruction and Development, EBRD, the European Investment Bank, EIB, Finnfund and Swedfund.

Finnfund is participating in the wastewater treatment plant project with a loan of four million euros.

The project will also receive support from the Finnish and Swedish governments as well as the Northern Dimension Environmental Partnership. The EU’s Tacis programme will finance the sludge incineration plant that is to be built as a parallel project along with the wastewater treatment plant. In addition, the City of St. Petersburg and Vodokanal will participate in financing the project.

The wastewater treatment plant is to be completed in 2005 and it will be capable of purifying the wastewater for a population of about 715,000 people.

AIG AFRICAN INFRASTRUCTURE FUND, AFRICA

Potholed roads, stuttering telecommunications links, poorly functioning energy supply systems and generally deficient infrastructure are the biggest obstacles in the way of African countries’ economic development. To solve these problems, new models in which private financiers and companies play a more central role are now being sought.

A good example of the new types of financing models is the AIG African Infrastructure Fund. The fund’s largest investor is the American insurance company American International Group Inc. Other participants include IFC, which belongs to the World Bank Group, and the African Development Bank.

Finnfund has invested 12 million euros in the fund, which has a total size of just under 400 million US dollars and a term of ten years.

AIG African Infrastructure Fund seeks to make investments in profitable infrastructure projects in which the private sector has a substantial participation. The fund can also carry on co-operation with state-owned companies in which the state is committed to reducing its holding in order to spur the company’s development.

The fund has defined its main target countries to be Morocco, Tunisia and Egypt in North Africa, Nigeria and Ghana in West Africa, Tanzania and Uganda in East Africa, and Mozambique and Democratic Republic of Congo in southern Africa. Telecommunications and energy projects occupy an important place among the sectors financed.

ELECSTER (TIANJIN) ASEPTIC PACKAGING CO. LTD., CHINA

The Chinese want to increase milk consumption, but delivering the readily perishable food from producers to consumers is far from easy. The popularity of Finland’s Elecster milk packaging systems is growing rapidly in the country, because it does not require an unbroken cold chain. Elecster machines fill the packs with ultra-heat treated (UHT) milk which depending on the packaging material has a shelf life of from 1 to 3 months.

Up to now Elecster has delivered 200 production lines to China. They are capable of producing about 10 million bags of milk a day. The Finnish company has also built a comprehensive servicing and spare parts network in the country.

Elecster’s next step in the Chinese market is to start the manufacture of the plastic film that is used in making the packages. The production plant is to be built in Tianjin near Beijing and will be completed during the spring.

The total value of Elecster’s investment is five million euros. The production plant will have 20 to 30 employees. Finnfund is participating in the project with an investment loan.

LATIN AMERICAN CHALLENGE INVESTMENT FUND (LA-CIF)

Finnfund’s partner Latin American Challenge Investment Fund LA-CIF is a good example of how small loans targeted at the poor in developing countries can also be a productive investment. LA-CIF operates in six Latin American countries and offers short-term loan capital to organisations and banks that grant microcredits to local SMEs in the form of loans at market interest rates.

Established in 1999, LA-CIF began to turn a profit right in its second year of operations, and in 2002 its return on equity was 18 per cent. The aggregate amount of the fund’s loan portfolio was 14 million U.S. dollars towards the end of 2002.

Co-operation with LA-CIF gives Finnfund valuable information on Latin America’s markets and the development of the private sector. Finnfund has invested half a million dollars in the fund. Other major providers of financing include the Latin American Development Bank IADB and Norfund, the Norwegian development finance institution.

In South and Central America it is estimated that there are 50 million small business people, of whom only a fraction qualify for a normal bank loan. The microcredits granted by LA-CIF’s partners are generally less than a thousand euros in amount. The maturity is 4-6 months and the interest rate is 25-28 per cent. Typical customers are shopkeepers and artisans.

MEKONG ENTERPRISE FUND (MEF), VIETNAM

MEF is the first investment fund that specifically aims to invest in small- and medium -sized private companies in Vietnam, Laos and Cambodia. The Fund makes equity investments in local companies, with a focus on export industries and service providers. Its aim is to have a positive impact on the development of the private sector in the Mekong region. About 65 % of the Fund’s investments will be in Vietnam, 25 % in Cambodia and 10 % in Laos.

The investors in the Fund include the Asian Development Bank (ADB), Nordic Development Fund (NDF), State Secretariat for Economic Affairs of Switzerland (SECO), Finnfund and other private investors. The Fund is also supported and sponsored by Mekong Project Development Facility (MPDF), which is a multi-donor program founded by IFC. MPDF’s role is to assist and accelerate the development of productive, self-sustaining, SMEs in the Mekong region. The Manager of MEF is Mekong Capital Ltd. Through Mekong Capital and MPDF, the Fund provides technical and advisory support to companies in which it invests.

The target size of the Fund is USD 25 million, of which Finnfund’s share is USD 3 million. The Fund has a life of ten years and it is not listed on any stock exchange. The average holding period for investments is five years and average size is approximately USD 500 000.

SHANGHAI ELTETE PACKAGING TECHNOLOGY CO LTD, CHINA

Shanghai Eltete Packaging Technology Co Ltd was founded in 2000. The company is located in the Jiang Qiao industrial zone in Shanghai. The Finnish sponsor of the project is Loviisa-based Eltete TPM Oy, whose main line of business is the manufacture of transport packaging products and their related technology.

The project company manufactures edge boards and other transport packaging products for China’s domestic and export markets. The most important export countries are Japan, Korea and Singapore. Production got started in February 2001.

The completed products are recyclable and the raw material used is also a recyclable material that is obtained, for example, from the paperboard industry. Eltete TPM Oy has delivered the production technology. The project company employs 30 people. Finnfund’s share of the financing for Shanghai Eltete Packaging Co Ltd is USD 600 000.

CLINIC SCANDINAVIA, RUSSIA

Scanfert Oy, a Tampere-based company specialised in the treatment of infertility, is expanding its operations in Russia. Clinic Scandinavia in St Petersburg is a full-service medical centre that will be financed in part by Finnfund.

Clinic Scandinavia marks an expansion of operations in St Petersburg to encompass all the main fields of medicine as well as surgery. In St Petersburg, Scanfert has previously run the AVA-Peter clinic, which is specialised in fertility treatments as well as gynaecology and urology. The new hospital has also Russia’s first private obstetrical ward.

In step with rising economic growth, the demand for private health services has increased rapidly in St Petersburg. A number of private clinics operate in the city, but prices are often beyond the means of people earning average incomes. The Clinic Scandinavia offers western-level health services at reasonable prices.

Another testimonial to the reputation of Finnish health services is that AVA-Peter also serves as a training clinic for the University of St Petersburg.

Apart from Finnfund, Scandinavian Clinic's providers of financing include International Finance Corporation, Nordea Bank and Finnvera plc.

NORSAD, AFRICA

Norsad is a joint Nordic development fund that focuses on the entrepreneurship of the countries of Southern Africa. The fund is owned jointly by the Nordic governments and a total of 350 million Danish kroner (USD 43.6 million) has been invested in the fund. The fund was established in 1990 and it opened its offices in Lusaka, Zambia, in 1991.

Norsad’s products are loans and guarantees. The loans are project loans for various corporate development projects. Guarantees are provided for local banks as loan collateral. The fund’s area of operations is the SADC region, which comprises Zambia, Angola, Namibia, Zimbabwe, Lesotho, Tanzania, Malawi, Botswana, Mozambique, Swaziland, Mauritius and South Africa.

It is a requirement for Norsad financing that one of the providers of financing in each project is a Nordic financing institution, such as Finnfund or also the Nordic Development Fund (NDF), Nordic Investment Bank (NIB) and Nordic Project Fund (NoPEF), which are Nordic regional providers of financing that operate in Finland.

Norsad’s purpose is to seek out markets which are unlikely to receive commercial financing owing to the excessively large risks. Norsad’s fundamental concept is to create financing possibilities for the kinds of markets for which risk financing would not otherwise be available.

SIAM INVESTMENT FUND II, THAILAND

Siam Investment Fund II, with a total capital base of USD 55 million, is under management of Finansa Group. Among the key investors are Capital Zurich Invest, ABN AMRO Asia Capital Investment, Mitsui and several European development finance institutions. Finnfund's investment in the Siam Investment Fund II is up to USD 4 million.

The Siam Investment Fund II seeks to be a source of solution capital to Thai companies working to re-position themselves after the Asian financial crisis. The Fund's objective is to capitalise on investment opportunities in Thailand through privately negotiated equity or equity-linked investments.

The Fund is targeting companies with strong fundamental businesses, undervalued assets and favourable prospects for growth, either domestically or internationally. Opportunities to invest are expected to occur through corporate restructuring, mergers, acquisitions, privatisations and other strategic transactions. The Fund's term is 10 years. 

RDS HOTELLI AS, ESTONIA

In December 1999 the Finnish construction company SRV Development Oy, the Danish companies SAS Hotel Investment A/S and IÖ-Fonden and Finnfund entered into an agreement that the companies would invest in the share capital of the Estonian joint venture RDS Hotelli AS. The purpose of the project was to build in Tallinn a five star hotel that will be operated by SAS Hotels A/S Denmark.

The total amount of the investment is about EUR 35 million. The main providers of loans for the project are Nordic Investment Bank and Landesbank Schleswig-Holstein (LB Kiel). The hotel was completed on schedule and the Radisson SAS Hotel Tallinn opened on 1 February 2001. The hotel has 25 floors, 277 guest rooms, two restaurants and a number of meeting rooms and conference auditoriums. The hotel is located right in the centre of Tallinn. Finnfund has invested USD 3.3 million in the share capital of RDS Hotelli AS.