Finnfund Update for Investors

September 2022
Forest Kilombero Valley Teak Company

Dear all,

The outlook for the global economy changed for the worse during the first half of 2022.

The Russian invasion of Ukraine triggered a change in the outlook for the global economy, and some economies will likely move into recession in the next quarters. The energy and food prices have increased significantly which has had a major negative effect on the household disposable income both in the developed and our target countries. Further, the COVID-19 crisis is not yet over and influences still many economies.

However, for us at Finnfund, this has been a busy six months.

    There has been an increased demand for capital from companies in various sectors. We have invested both equity and debt in companies in sectors varying from agriculture to fintech. Taking risks in such markets is part of the way of working for an impact investor.

    On a positive note, I would like to highlight two exciting investments we have made in Q2: an equity investment into Lona Group, a South African-based citrus and fresh-produce exporter, and a debt investment into Wave, a money transfer provider that operates in Sub-Saharan Africa. You may read more about these investments below.

    In addition, we settled down in Kenya with a new office. Johanna Raehalme, our new Head of Nairobi Office, moved to the capital, and the office is now fully operational. If you are in Nairobi, please do not hesitate to get in touch.

    Despite the somewhat gloomy global economy, I remain positive. There are great entrepreneurs and exciting companies in our target markets. We continue to do what we do best; investing in impactful commercial companies with large potential.
    Markus Pietikäinen
    Chief Investment Officer

    P.S. We wish you find this quarterly newsletter useful. Should you wish to receive this newsletter in the future but have not yet joined our subscribers, please click here. You can unsubscribe at any time.

    Have you explored our Annual Report?

    Finnfund's Annual Report 2021 has been published. It covers key figures and highlights - and gives an overview of our policies and practices.

    Investment decisions and disbursements in Q2/2022

    Table Investor Newsletter August
    CFO insight into Q2: Keeping up the speed

    "The second quarter of 2022 continued to be a good one for Finnfund," writes Olli Sinnemaa, Chief Financial Officer. Finnfund continued growing in the second quarter of 2022, reaching a portfolio value of 684 million euros.
    Read more
    Finnish company and interested in Africa? Join us in October!

    Finnfund, together with Finnpartnership, will hold a seminar, highlighting the business possibilities in Africa for Finnish companies. The seminar will be held in Finnish. Read more & register (in Finnish)
    City view of Nairobi, Kenya
    Citrus and fresh-produce exporter Lona Group uses expansion capital to make the business more climate resilient

    Finnfund, among a consortium of leading development finance institutions and together with Phatisa, has acquired a significant minority stake in South African-based citrus and fresh-produce exporter, Lona Group. Read more
    Lona Group South Africa
    Finnfund invests in Wave, a mobile money provider bringing affordable services to Sub-Saharan Africa

    “Digital solutions are becoming crucial in filling the gaps in financial inclusion by providing access where it is most needed”, says Finnfund’s Investment Manager Kuutti Kilpeläinen. Read more
    Wave mobile money
    E-mobility talk at the Africa Energy Forum

    “Electric mobility is a huge opportunity and truly a global trend. We are definitely looking for new investment opportunities in e-mobility, said Jussi Tourunen, Associate Director and Head of Finnfund's Energy and Infrastructure portfolio, at the Africa Energy Forum (AEF). The panel discussion on e-mobility was part of Finnfund contribution to the AEF. Read more about our approach
    Africa Energy Forum 2022 participants

    A tale of surveillance – investor’s role in dealing with data confidentiality

    BLOG – "Connectivity is essential in today’s world, for all of us, everywhere. That’s the good story. Now, connectivity also comes with challenges. Is someone reading my messages? listening to my phone calls? keeping a log of my messages?"

    In her blog post, Sylvie Fraboulet-Jussila discusses how a responsible investor can deal with data confidentiality. And why it all makes her think about Address Unknown, a famous novel written by Kathrine Kressmann Taylor in 1938.

    Preparing for a successful exit: Sustainability should translate into a premium

    BLOG – "In early March, I hopped on a long flight to Helsinki from Yangon in Myanmar. I was excited to embark on an adventure and a new challenge ahead of me: I had wrapped up my existing job in Yangon, accepted a job offer from Finnish development financier and impact investor Finnfund and was looking forward to start a new life in this Nordic capital claimed to be one of the most liveable cities in the world."

    Kyaw Latt sums up his first three months at Finnfund – and in Finland.
    Kyaw Latt
    Kaisa Alavuotunki, Finnfund

    Recap of the year 2021: Keeping up the good work in a challenging investment environment

    REPORT – In 2021, the COVID-19 crisis and political turmoil in many of our target countries continued affecting our work. Despite all this, Finnfund acted in accordance with its mission and made new investments throughout the year; we exceeded our investment targets in numbers and volume.

    "We have also taken significant steps in our impact and sustainability work. For example, we adopted a new climate statement that is underlying our commitment to climate change mitigation and adaptation. We were very glad to report that our investment portfolio is carbon net negative, probably as the first development financier in the world," said Kaisa Alavuotunki, Director, Impact and Sustainability.

    "On top of that, we did 28 new, exciting investments that we hopefully will see generating long-lasting positive impact over the years to come," she continued.
    Did you know...

    A majority of our investments are located in Africa

    Today, more than half of our investments are located in the African continent. In 2021, Africa was Finnfund's primary investment destination, with 60% of volume and 57% of decisions. Asia comes second with slightly less than a quarter of investments.

    In line with our strategy to triple our impact, we kept investing in low-income countries: 44% of our financing went to the least developed countries and 54% to lower-middle-income countries. Just 2% targeted upper-middle-income countries.

    Read more
    Map of investments

    Interested in knowing more?

    Please visit our website or contact us.
    Finnfund logo
    Finnfund is a Finnish development financier and impact investor. We build a sustainable future and generate lasting impact by investing in businesses that solve global development challenges. We invest 200–250 million euros in 20–30 companies in developing countries each year. Our focus sectors include renewable energy, sustainable forestry, sustainable agriculture, financial institutions, and digital infrastructure and solutions. Today Finnfund’s investments, commitments, and investment decisions total about 1.12 billion euros, half of them in Africa. The company has 90 employees. For more information, please visit www.finnfund.fi
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