Danish International Investment Funds The Investment Fund for Central and Eastern Europe

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Danish International Investment FundsThe
Investment Fund for Central and Eastern Europe
Piotr Lemieszek and Zbigniew Gluchowski Warsaw
Advisory Office

• Bremerholm 4
• 1069 Copenhagen K
• Phone [phone]
• Fax [phone]
• E-mail ioe_at_ioe.dk
• Website www.ioe.dk

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The Investment Fund for Central and Eastern
Europe IØ

• Basic Facts
• Created by Act of Danish Parliament in 1989
• National tie
• Various sectors
• Equity EUR 230 million
• 400 projects in 18 countries
• 151 active projects
• EUR 640 million invested since 1990
• Countries of operation
• IØ Russia, Ukraine and Belarus
• IFU other CIS
• Phasing out 2009-2012

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Principles of investment

• A Danish company shall participate with a larger
  exposure than IØs
• Investments up to EUR 7 million in one project
• IØs investment cannot exceed 30 (50) of the
  total investment
• Share capital and/or loan

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Equity Investments

• Share capital
• IØs exit
• sale to partner (willing buyer willing seller
  or put-call options)
• public listing / stock exchange
• sale to third parties (seldom!)
• Subordinated loans
• Equity loans

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Loans and Guarantees

• Project loans
• hard currency DKK, EUR
• commercial terms 6-months floating rate (CIBOR,
  LIBOR)
• a risk premium (2 - 6 for Ukraine)
• up to 5 years
• non-recourse, local collateral
• Guarantees
• commercial terms

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400 Projects Distributed by Host Countries
1990-2005
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IØs presence in Ukraine

• Preparations to establish Kyiv Adviser Office in
  the 2nd half of 2006
• Advisers
• Kyiv
• Lviv
• Portfolio of 21 projects (18 active), mostly in
  Western Ukraine
• Total investments contracted EUR 15 million
• Growing pipeline of projects
• Network of Danish companies in Ukraine

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21 projects in Ukraine

• Rapid growth of portfolio in the last two years
• 9 new projects in 2005
• Total investments contracted in 2005 EUR 4.6m

Total accumulated number of projects
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21 Projects Distributed by Sector
Approx. 20 agri-projects in CEE/CIS incl. 13 in
pig production, incl. 3 existing in Ukraine plus
approx. 4 in the pipeline
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IØs typical agricultural project key figures

• Pig production
• 3,000 sows
• 72,000 slaughter pigs p.a. 5,800 tons of pork
  p.a.
• (250-300 such farms would provide the total
  demand of Ukraine for pork)
• Turnover EUR 12 million p.a.
• 56,000 cubic meters of slurry p.a.
• 2,400 ha necessary to comply with EU
  environmental regulations
• farm buildings ca. 60,000 m2
• Investment budget ca. EUR 10 million
• Financing
• Equity EUR 4 million Danish partner EUR 3
  million
• IØ EUR 1 million
• Loans EUR 6 million Danish partner/banks/IFI
  EUR 4 million
• IØ EUR 2 million

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IØs typical agricultural project other issues

• Danish project owner and management
• local staff, skills and training
• local co-investors, landowners
• lease or ownership of land, alternatively slurry
  contracts
• duration vs. maturity of financing
• structure of ownership, registered titles,
  concentration
• lease or ownership of buildings, collateral
• local climate conditions and soil characteristics
• CSR, environmental and animal welfare
  requirements
• permits, bureaucracy, inspections
• regulatory framework import tariffs and quotas
• VAT on capital investments
• import of live animals and inputs
• value chain and vertical integration
• availability of local bank financing
• potential for rape seed and bio-fuels production

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• Thank you for your attention

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Legal Mandate

• The objective of Denmark's support to Danish
  investments in Central and Eastern European
  countries is to assist the reformist forces in
  these countries in achieving increased economic
  growth and development of trade and industry as
  well as to foster closer economic co-operation
  between Denmark and Central and Eastern Europe
  for the benefit of the East-West relationship in
  general as well as Danish business and employment.

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Purpose of Operation Mission, Vision and
Strategy

• MISSION To enhance global economic growth,
  development and more equitable income
  distribution through increased global flow of
  socially and environmentally responsible,
  productive investments making optimal use of
  comparative advantages 
• VISION To contribute through information and
  advice in connection with co-investments to
  enhance Danish enterprises active participation
  in the global flow of productive investments
  towards developing and reform countries.
• STRATEGY To become known, recognised and used by
  all relevant Danish enterprises as a competent
  provider of know-how, experience and external
  financing as well as their most preferred
  investment partner in developing and reform
  countries.

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Danish International Investment Funds