Norfund
Encyclopedia
Norfund is a private equity
company established by the Norwegian Storting (parliament) in 1997 and owned by the Norwegian Ministry of Foreign Affairs
. The fund receives its investment capital from the state budget. The head office is located in Oslo
with local offices in Thailand
, Costa Rica
, Kenya
and South Africa
.
Norfund's mission is to help developing countries
fight poverty through supporting economic growth, employment and technology transfer. The investments are done on commercial terms directly in companies or through local investment funds. Norfund can invest in countries with a BNI per capita below USD 6925 (the World Bank
threshold), and has chosen a strategic focus on Eastern and Southern Africa, Central America and South-East Asia. Renewable energy, financial services and agribusiness are the three main sectors in which Norfund invests. Norfund is mainly an equity investor (typically a share of about 20%), but the fund can also give loans. Norfund is monitoring the economic, environmental and social consequences of its investments to ensure a sustainable impact. Norfund has created two strategic subsidiaries: Aureos Capital (with the British CDC Group), the world's largest fund management company targeting small and medium-sized enterprises in developing countries; and SN Power
(with Statkraft
), a company producing hydroelectric power for approximately 11 million people in developing countries.
In 2010 Norfund had a 10% internal rate of return
on its investments (11% since inception), while approx. 165,000 persons were employed world-wide in businesses where Norfund had invested. The companies paid NOK 2.7 billion in local taxes. The share of investments by Norfund to LDC
was 45%. The total investment capital was approx. NOK 5.8 billion NOK (USD 1 billion).
Norfund is Norway's largest investor in microcredit
in developing countries. On 2 June 2008, Norfund established the Norwegian Microcredit Initiative (NMI) together with private investors Ferd
, Storebrand
, KLP and DnB NOR
totalling NOK 600 million.
The Norwegian efforts to promote private sector development in poor countries was evaluated in 2010. The report refers to Norfund as one of the main policy instruments in development assistance towards business.
In 2010 a follow up of an earlier revision of the fund (from 2007) was presented by the Office of the Auditor General.
In 2007 the Auditor General ment that Norfund so far had not reached the defined targets for the fund. In the follow up from 2010 it is emphasized that the fund now invests more than 30% in LDCs and that the reporting of results, both financial and developmental, has improved considerably, and the case was brought to a close.
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
company established by the Norwegian Storting (parliament) in 1997 and owned by the Norwegian Ministry of Foreign Affairs
Norwegian Ministry of Foreign Affairs
The Royal Norwegian Ministry of Foreign Affairs is the foreign ministry of the Kingdom of Norway...
. The fund receives its investment capital from the state budget. The head office is located in Oslo
Oslo
Oslo is a municipality, as well as the capital and most populous city in Norway. As a municipality , it was established on 1 January 1838. Founded around 1048 by King Harald III of Norway, the city was largely destroyed by fire in 1624. The city was moved under the reign of Denmark–Norway's King...
with local offices in Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
, Costa Rica
Costa Rica
Costa Rica , officially the Republic of Costa Rica is a multilingual, multiethnic and multicultural country in Central America, bordered by Nicaragua to the north, Panama to the southeast, the Pacific Ocean to the west and the Caribbean Sea to the east....
, Kenya
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
and South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
.
Norfund's mission is to help developing countries
Developing country
A developing country, also known as a less-developed country, is a nation with a low level of material well-being. Since no single definition of the term developing country is recognized internationally, the levels of development may vary widely within so-called developing countries...
fight poverty through supporting economic growth, employment and technology transfer. The investments are done on commercial terms directly in companies or through local investment funds. Norfund can invest in countries with a BNI per capita below USD 6925 (the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
threshold), and has chosen a strategic focus on Eastern and Southern Africa, Central America and South-East Asia. Renewable energy, financial services and agribusiness are the three main sectors in which Norfund invests. Norfund is mainly an equity investor (typically a share of about 20%), but the fund can also give loans. Norfund is monitoring the economic, environmental and social consequences of its investments to ensure a sustainable impact. Norfund has created two strategic subsidiaries: Aureos Capital (with the British CDC Group), the world's largest fund management company targeting small and medium-sized enterprises in developing countries; and SN Power
SN Power
Statkraft Norfund Power Invest AS or SN Power is a Norwegian power company with investments in hydroelectricity in Chile, India, Nepal, Peru, the Philippines and Sri Lanka. Total mean average output from the 14 power stations is 3,343 GWh, with additional five projects with 5,793 GWh under...
(with Statkraft
Statkraft
Statkraft is a Norwegian state owned electricity company. With a total energy production of 44.9 TWh in 2007, the Statkraft Group is the third largest energy producer in the Nordic region, as well as the largest energy producer based on renewable energy sources in Europe,consisting of 40% of the...
), a company producing hydroelectric power for approximately 11 million people in developing countries.
In 2010 Norfund had a 10% internal rate of return
Internal rate of return
The internal rate of return is a rate of return used in capital budgeting to measure and compare the profitability of investments. It is also called the discounted cash flow rate of return or the rate of return . In the context of savings and loans the IRR is also called the effective interest rate...
on its investments (11% since inception), while approx. 165,000 persons were employed world-wide in businesses where Norfund had invested. The companies paid NOK 2.7 billion in local taxes. The share of investments by Norfund to LDC
LDC
LDC may refer to:* Least Developed Countries* Lyon Dubai City* Linley's Dungeon Crawl, a Roguelike role-playing game* Long Distance Code of Reed-Solomon code* Local Development Corporation* Local Distribution Company* Leonardo DiCaprio...
was 45%. The total investment capital was approx. NOK 5.8 billion NOK (USD 1 billion).
Norfund is Norway's largest investor in microcredit
Microcredit
Microcredit is the extension of very small loans to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit...
in developing countries. On 2 June 2008, Norfund established the Norwegian Microcredit Initiative (NMI) together with private investors Ferd
Ferd
Ferd is a Norwegian conglomerate that operates within industry and finance as well as a real estate portfolio. The group is owned by Johan H. Andresen jr. and dates back to 1778...
, Storebrand
Storebrand
Storebrand is a financial services company in Norway. By volume, the company's main activities are related to life insurance and pension savings. However, the company also has major divisions working on investments, banking and, since 2006, P&C insurance products...
, KLP and DnB NOR
DnB NOR
DNB ASA is Norway's largest financial services group with total combined assets of more than NOK 2.0 trillion and a market capitalisation NOK 102 billion as per December the 31st. The Group includes brands such as DNB, Vital, Nordlandsbanken, Cresco, Postbanken, DnB NORD and Carlson...
totalling NOK 600 million.
The Norwegian efforts to promote private sector development in poor countries was evaluated in 2010. The report refers to Norfund as one of the main policy instruments in development assistance towards business.
In 2010 a follow up of an earlier revision of the fund (from 2007) was presented by the Office of the Auditor General.
In 2007 the Auditor General ment that Norfund so far had not reached the defined targets for the fund. In the follow up from 2010 it is emphasized that the fund now invests more than 30% in LDCs and that the reporting of results, both financial and developmental, has improved considerably, and the case was brought to a close.