Norfund
- Partners with fund managers
- Provides local knowledge
- Invests equity and risk capital
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- Norfund venture capital product
- Norfund contact details
[Accessed July 27, 2023]
About Norfund
Norfund is an important resource for the Norwegian government as it seeks to bolster the private sector in developing countries and alleviate poverty.
As defined by the Norfund Act of 1997, its mandate allows it to invest by providing equity and other risk capital. Norfund is willing to take on more risk than many different investors and prioritises projects with strong potential for development and profitability.
Creating jobs and supporting scalable enterprises
The fund primarily invests in Sub-Saharan Africa but also supports select countries in Asia and Latin America. Its investments focus on companies that create jobs, offer goods and services, and pay taxes, contributing to economic and social development. Key investment areas include renewable energy, financial inclusion, green infrastructure, and scalable enterprises.
Strategies for enhancing profitability and development effects
Norfund prioritises profitability, as companies must be profitable to succeed. Norfund provides active ownership and business development support to enhance profitability and development effects.
Since its establishment, the fund's Internal Rate of Return (IRR) has been 4.9% (as of the end of 2021). Norfund aims to improve lives and create jobs by investing in businesses that promote sustainable development.
The role of the Norwegian Government in Norfund's operations
The Norwegian International Development Assistance budget fully finances Norfund and the Norwegian Parliament approves its annual capital allocation.
The Minister of International Development is constitutionally responsible for Norfund, while the General Assembly approves its statutes and selects its Board of Directors. The Board sets Norfund's strategy, hires its CEO, and approves investments that exceed specified thresholds.
Overall, Norfund's investments support sustainable economic growth, crucial for achieving the United Nations' Sustainable Development goal of ending poverty. The fund invests in businesses that other investors might avoid, assumes more risk than most, and improves profitability and development effects through active ownership and business development support. As a tool for the Norwegian government to strengthen the private sector in developing countries and alleviate poverty, Norfund is invaluable.
Norfund Services
Norfund offers venture capital services through fund investments to support the growth and development of local, sustainable companies.
The fund managers provide local knowledge, industry insight, and efficiency initiatives to contribute to building and developing local businesses. With 55 funds in their portfolio as of 2021, Norfund has committed to invest in 583 SMEs.
Norfund invests private equity funds to access investment areas outside their expertise and contribute to more professional and efficient business practices.
How fund managers provide access to investment areas for Norfund
Investing in private equity funds also allows Norfund to reach more companies and other business areas they could not access independently.
Norfund partners with fund managers to provide risk capital, active ownership, and professional expertise to companies for their development and growth. The fund managers have local knowledge that helps companies succeed. Norfund prioritises investments in countries on their "core" and "extended reach" lists, but investments for a fund are not limited to these countries and can be made elsewhere.
Investing in pan-regional funds and SMEs
Norfund selects funds that are consistent with its investment approach and strategy, with a focus on those that can have a significant developmental impact in sectors and industries where Norfund needs direct investment capabilities.
The company invests in both larger pan-regional funds and smaller funds that target small and medium-sized enterprises (SMEs), which often face difficulty accessing funding. Additionally, Norfund invests in impact and venture funds that operate in challenging business environments.
Norfund's investment in job creation through the Sub-Saharan African fund
To illustrate, Norfund's Sub-Saharan African fund seeks to generate 2000 job opportunities in the food and agriculture sector. Norfund helps in the creation of new private equity funds such as the Kinyeti Fund in South Sudan, and also invests in established funds that address the distinct obstacles in such markets.
Even though these projects may take up significant time, if accomplished, they can be highly beneficial to the local communities by contributing to their development.
Norfund – Venture Capital
- Loan Type Venture Capital
Benefits of Norfund
- Norfund provides risk capital and expertise to companies in line with its priorities.
- Focus on firms needing funding, alignment with developmental goals, and compliance with environmental and social standards.
- Norfund prioritises equity investments to address capital scarcity in developing countries.
- Provides loans to companies it invests in and financial institutions, offering local expertise and guidance.
- Rigorous screening, analysis, negotiation, funding, and active ownership.
- Investee companies must adhere to corporate responsibility, anti-corruption, and environmental standards.
- Offices in Oslo, Kenya, Ghana, Cape Town, Bangkok, and San José for accessible support and collaboration.
- Supports job creation, sustainable business growth, and community development in developing countries.
Norfund's focus on developmental impact and compliance
Norfund is a development finance institution specialising in providing risk capital and expertise to companies aligning with its strategic priorities.
Norfund's criteria for investments
Norfund invests in funds and companies that may need help to obtain funding from other sources, focusing on investing in experienced managers and teams of competent professionals who have a developmental impact and comply with national laws and IFC environmental and social performance standards.
Equity investments: A priority for Norfund
Norfund prioritises equity investments since equity is the scarcest type of capital in most developing countries. It also provides loans to companies in which it has an equity position, as well as to banks and other financial institutions. It invests directly in selected companies and funds with investment strategies aligned with its own.
It provides value by offering local expertise, market knowledge, and access to its extensive business network. It also provides guidance on environmental, social, and business integrity issues to help businesses become more vital.
Requirements and expectations of Norfund's investment process
The investment process involves an initial screening and evaluation of potential investments, followed by an in-depth analysis of the company's management team, market potential, financial performance, and social and environmental impact.
After this, Norfund negotiates with the investee to establish mutually beneficial terms and conditions for the investment. Once the agreement is reached, Norfund provides the necessary funding and actively monitors the investment's progress.
Norfund maintains a close relationship with the investee throughout the investment period, providing support and guidance to help the company grow and succeed.
Active ownership by Norfund in its investee companies
Companies that Norfund invests in must carry out corporate social responsibility, have zero tolerance for corruption, adhere to IFC's Performance Standards and ILO's core conventions, and comply with national laws and regulations. They must also have clear HSE guidelines.
Norfund does not expect "perfect companies" at the time of investment, but it does require a genuine willingness to improve standards over time.
Before investing, Norfund provides active ownership to the companies it invests in. Interested parties that meet Norfund's criteria can contact one of Norfund's team members listed on its website. Norfund has offices in Oslo, Kenya, Ghana, Cape Town, Bangkok, and San José.
Norfund Contact
Contact Number
Website
Physical Address
- 5 Cavendish St, Claremont Cape Town Western Cape 7708 South Africa
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Opening Hours
- not available