Finnfund Update for Investors

November 2022
Proximity Finance Myanmar smallholder farmer.

Dear all,

In Finland, we are enjoying the darkest time of the year. When watching the news, I sometimes find myself thinking that it somewhat reflects this dark and cold season.

The challenges faced in COP27 in Egypt highlighted the fact that in order to meet the targets set by the Paris Agreement, different actors and actions in all fields of society are sorely needed.

Both in climate change mitigation and adaptation, the private sector is playing an integral role. As an impact investor and development financier fighting climate change is at the core of our mandate.

    Kaisa Alavuotunki.
    One concrete example of this ambition put into practice is the launch of the African Forestry Impact Fund, AFIP, with the aim of raising USD 500 million to support the sustainability and development of Africa’s growing forestry sector. As you may read below, in October, AFIP announced its first acquisition.

    During the last months, Finnfund also took a significant step in the field of sustainability bonds, as we launched our first Sustainability Bond Framework, followed by an issuance of a EUR 75 million sustainability bond. This stems from our aim to mobilise funding for sustainable development by providing investment opportunities for private investors, and in our strategy, launched at the beginning of this year, we set one of our key targets to fund 50% of our investments with private capital by 2030.

    As we know, mobilising private capital is key to achieving the UN Sustainable Development Goals (SDGs) in developing countries, given that the UN estimates the financing gap at USD 2.5 trillion per year.

    On behalf of the Finnfund team, I wish you all a peaceful and prosperous end of the year.

    Kaisa Alavuotunki

    Impact and Sustainability Director

    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 covers key figures and highlights as well as the latest impact figures covering the year 2020 - and gives an overview of our policies and practices.

    Investment decisions and disbursements in Q3/2022

    table of investment decisions and disbursements in Q3
    CFO insight into Q3: Towards the end of the year

    "The third quarter of the year was marked by finalisation of our first Sustainability Bond Framework," writes Olli Sinnemaa, Chief Financial Officer. In addition, Finnfund’s investments continued to grow, reaching a portfolio value of 707 million euros. Read more
    Olli Sinnemaa.
    Finnfund invests in regional insurtech Igloo to increase the insurance coverage in Southeast Asia

    Igloo facilitates digital insurance products and solutions that address each step of the insurance value chain across Southeast Asia. Read more
    Shutterstock rice fields
    First investors in African Forestry Impact Platform announced

    Finnfund, New Forests, British International Investment (BII) and Norfund, have signed subscription agreements for their investment in a dedicated African fund, the African Forestry Impact Platform (AFIP), for USD 200 million, and announced AFIP’s first acquisition. Read more
    Forestry worker working in the Green Resources nursery.
    Finnfund’s 3.4 million US dollar investment in KaiOS helps bring affordable mobile connections to Sub-Saharan Africa

    Finnfund invests 3.4 million US dollars in KaiOS Technologies, maker of KaiOS, the leading mobile operating system for smart feature phones. Read more
    Finnfund issues a EUR 75 million sustainability bond

    Finnfund issues a EUR 75 million sustainability bond. The bond represents Finnfund’s first issuance under its newly established Sustainability Bond Framework. Read more
    Picture of the cover of the Finnfund Sustainability Bond Framework .
    Finnfund invests in VinFast, manufacturer of Vietnam’s first fully-electric public transport bus fleet

    The investment will support Vietnam’s efforts to achieve net-zero greenhouse gas emissions and expand high-tech manufacturing industries. Read more
    Many VinFast buses standing in a row at the bus station.
    Investment in Africa Mobile Networks bridges the digital divide between rural and urban populations in Sub-Saharan Africa

    OP Finnfund Global Impact Fund I and the BlueOrchard Sustainable Assets Fund will provide a USD 20 million debt investment to support the growth of Africa Mobile Networks, a telecom provider focused on rural Sub-Saharan Africa. Read more
    Two Africa Mobile Networks teletowers.
    Sampsa Auvinen.

    Sampsa Auvinen: Crisis is reshaping the global plywood market

    BLOG – "Can this be true? A modern factory producing high-quality FSC-certified plywood in Ghana? When I showed European buyers at the Dubai Woodshow exhibition in March pictures of the factory in Ghana, many found them hard to believe. Preconceptions are hard to break. I myself believe that this is just the beginning," writes Sampsa Auvinen, Executive Chairman of Miro Forestry.
    Quote card_Marko Berglund_241122_2

    Supporting alignment with the Paris Agreement through investing in carbon removals

    ARTICLE – "Sustainable nature-based solutions provide a ready, proven and economically feasible solution for carbon removal," writes Marko Berglund, our Senior Impact Adviser.

    At Finnfund, we are committed to keeping our investment portfolio carbon net negative. In this article, originally published by EDFI, Association of European Development Finance Institutions, Marko discusses credible carbon removals financing options and shares his thoughts on current challenges and ways forward.
    Picture of Mr Ilkka Norjamaki in Finnfund's Sustainable Forestry video.

    Sustainable forestry has an integral role in fighting climate change and deforestation

    VIDEO – The Food and Agriculture Organisation of the UN, FAO, estimates that in Africa alone, over two million hectares of forests are lost every year. Population growth, urbanisation and a growing middle-class add pressure on the remaining natural forests.

    Sustainable, responsible forestry is one key way to curb deforestation and climate change. In, for example, Africa, it can already be seen that the timber produced through sustainable plantations is easing the pressure on natural forests. Most of our direct forestry investees are located in Sub-Saharan Africa and Latin America, where the deforestation rate is most alarming. Most of the forests managed by our investee companies have been certified by the international Forestry Stewardship Council (FSC) as socially and environmentally responsible and sustainable.

    Finnfund is a leading global long-term investor in sustainable forestry. Watch this video to learn more about our approach.
    Did you know...

    To become a Finnfund investee, a company does not need to be perfect

    When assessing potential investments, any gaps identified in the investees’ management and performance against the applicable requirements is documented in an Environmental & Social Action Plan (E&S Action Plan) with a clear description of the gap identified, necessary actions, resources, expected outcomes, and mutually agreed deadlines. The E&S Action Plan is annexed to the financing agreements and followed up regularly.

    To become a Finnfund investee, a company does not need to be perfect. Typically, after Finnfund’s investment decision, it takes the investee company 1–3 years to close the E&S Action Plan and achieve the required level of performance, as shown in figure below. Read more
    Diagramme of the progress of Environmental and Social Action Plans of Finnfund investments since 2014

    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 100 employees based in Helsinki and Nairobi. For more information, please visit www.finnfund.fi
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