Danish Investment Funds have enabled various developing countries, including India to contribute to the UN's Sustainable Development Goals by producing cutting-edge technology in renewable energy, climate control, sanitation, transport, and infrastructure and creating new green jobs
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The foreign investment portfolio of Denmark has started taking a new shape after the formation of various investment funds supporting other countries’ businesses focusing on social and economic reasons. Although foreign investments by Denmark have been declining in the past decade, the Investment Fund for Developing Countries (IFU) is gaining momentum through its investments in under-developed countries.
Investment Fund for Developing Countries (IFU)
IFU is an independent financial institute, which comes under the Government of Denmark and mainly focuses on investing in businesses in under-developed countries, including Africa, Latin America, and Southern Asia. The central idea is to uplift businesses working in the social and environmental sector in such countries to create an impact and support the 17 UNSDGs. It recently joined hands with private investors and formed the Danish SDG Investment Fund in 2018 with a total capital of DKK 4.86 Billion.
Danish SDG Investment Fund
The Danish SDG Investment Fund is a newly formed fund under the PPP model, which includes the IFU and six other private pension funds, as shown in Figure 1. They mainly invest and advise businesses in the domain of renewable energy, infrastructure, agribusiness, etc. Investment is made either by acquiring equity or providing long-term and short-term loans to such companies. Various Danish companies also assist and mentor these firms through their expertise and knowledge in such domains. The fund is managed by IFU itself, which is highly experienced in such markets for about 40 years. All the pension funds and the IFU along with the Danish State, contributed a total of DKK4.1 Billion to the Danish SDG Investment Fund, as shown in Figure 2.
Objectives of the Danish SDG Investment Fund
The Danish SDG Fund has till now invested in various developing countries. Such a model is a win-win for everyone. The investors get 10-12% returns, and the businesses get access to Danish technology and mentorship. Together this partnership engendersmore rapid advancements in sectors like renewable energy, advancing our drive towards sustainability.
Some of the recent investments by the Danish SDG Fund include:I.Africa: The Fund has invested close to DKK 47 Million in an education platform business in Africa to encourage more students to pursue higher studies in Africa (presently only 10% of the total population).
[This article has been published with permission from IIM Calcutta. www.iimcal.ac.in Views expressed are personal.]