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Financial instruments

Finnfund finances companies operating in or being established in developing countries or in Russia. Our financial instruments are equity investments, investment loans, mezzanine financing and a combination of these. In exceptional cases Finnfund can grant guarantees, too. Investee companies must operate in the private sector or be privatization projects.

Finnfund’s investment criteria include profitability, sustainability and positive development impacts in the target country.

Finnfund’s financing is for both greenfield and expansion projects that involve a Finnish business interest or development policy interest. Finnish business interest can be cooperation with Finnish companies, such as projects with a Finnish company as a shareholder or as a technology provider. Development policy interest could be, for example, projects that curb climate change.

Finnfund’s financing is not tied to exports from Finland.

Equity financing

Equity investments are typically made directly (or through a holding company) into the project company. Finnfund’s equity participation is limited to minority shareholding and does not usually exceed the shareholding of the sponsor. The investment and exit terms are agreed in advance with the sponsor.

Investment loans

Finnfund’s investment loans are also provided directly to the project company. The loans will be adjusted to the cash flow forecast of the project. Maturity can be anything from medium to long-term. The repayment schedule is tailored to suit the project. Loans are usually provided in euros or dollars. Collateral is also determined according to the project.

The interest rate is a combination of a base rate and margin. The margin depends on the risks Finnfund faces in the project.

Mezzanine financing

To best suit the capital needs of the project Finnfund can also arrange financing with mezzanine instruments. These include unsecured subordinated loans, preferred shares and convertible bonds.


In exceptional cases Finnfund can grant guarantees, for example to facilitate client's access to financing in local currency.


When the financing needs of the project exceed Finnfund’s capacity to take risk, we may be able to finance it together with other finance institutions. Finnfund is a member of EDFI (European Development Finance Institutions) and collaborates closely with its members. Finnfund also has a long-standing cooperation with IFC (International Finance Corporation), the EBRD (European Bank for Reconstruction and Development) and other development banks as well as commercial banks. Finnfund is also an investor in a number of private equity funds active in developing countries.