Investment operations
Introduction
We finance and develop businesses that contribute to sustainable growth, job creation and access to essential products and services in developing countries. Through our investments, we create the conditions for people to become self-sufficient and lift themselves out of poverty. Climate, decent work, digitalisation, gender are issues that permeate our activities, regardless of the choice of instrument, geography or sector.
Swedfund invests in four sectors which we consider to be particularly important for achieving our goal, to reduce poverty: Energy & Climate, Financial Inclusion, Sustainable Enterprises and Food Systems. By focusing resources and expertise on selected areas, we can increase the effectiveness of our business and our impact.
Our work is based on our Theory of Change This means that we carry out an analysis of how a potential investment can contribute to change and what direct and indirect development effects we can help to create.
Instruments
We have different financial instruments for our investments: equity, loans and guarantees. We make direct and indirect investments through equity and loans.
When Swedfund invests in equity, we are a minority shareholder. We have ample opportunity to exert influence and usually have a seat on the company’s Board of Directors. As a shareholder, we aim to be a long-term investor, but to sell our shares as soon as we are no longer needed. We remain a shareholder as long as there is possibility to make a positive difference and contribute financial resources and knowledge, for example within sustainability and impact on society.
A loan entails less risk compared to an equity investment and is more predictable. Requirements regarding sustainability, reporting and further development of sustainability work are established in the same way as for other forms of financing, but after the loan has been disbursed, our possibility to exert influence decreases somewhat. It is therefore vital to agree on these requirements in a loan agreement. Loans as instrument is an effective way of reaching many smaller companies and entrepreneurs.
Swedfund have been pillar-accredited by the EU, meaning we can use the EU’s instruments for private sector development. Swedfund is also a partner in EDFI MC, a management company through which we have access to EU guarantees. The guarantee schemes will be implemented in areas such as renewable energy, digitalisation, climate and health.