We invest directly in companies and indirectly through funds and financial institutions. By indirect investment, we mean an investment in, for example, a bank or fund, whereby our capital is lent on to the bank’s customers or invested by the fund in small and medium-sized businesses.
Our investments are based on long-term but time-limited involvement. The choice of investment instrument depends on the needs of each portfolio company, but we also aim to establish a good balance between the instruments in our portfolio.
When we invest in equity we partake as a minority owner. The main partner is expected to invest at least as much capital and is responsible for ensuring the business operates in accordance with our ESG (environmental, social and governance) requirements, as specified in every agreement.
As a partial owner, we actively follow the development of the project. In many cases we have a representative on the board of directors, or recommend a position on the board to someone in our network who we know has relevant expertise.
Our aim as a shareholder is to be a long-term owner, but we exit once our know-how or our capital is no longer needed.
A loan entails lower risk than investing equity and is a more predictable instrument. Making a loan to a microfinance institution is a way for us to reach more borrowers and entrepreneurs.
As with other forms of financing, we contractually bind the same requirements on sustainability, reporting and further development of sustainability work when we invest through loans.
Our relationship with the borrower ends once the final payment has been made.
Investing in funds is a way for us to reach small and medium-sized businesses that may otherwise have difficulty in obtaining long-term financing. We also use funds to help increase access to renewable energy.
We set the same requirements for indirect investments in funds as for direct investments. The requirements for us to be able to invest in a fund include the following:
i) the fund’s investment guidelines, sustainability guidelines and reporting requirements must match Swedfund’s requirements;
(ii) the fund must have a transparent structure;
(iii) the fund manager must be competent, reliable and have a good track record;
(iv) the fund’s investments must be assessed to generate good development results; and
(v) the fund investment must provide a good complement to Swedfund’s direct investments.
Each individual project that comes to us is reviewed, analysed and followed up in detail. Our senior investment managers and analysts, together with our ESG team, conduct an in-depth analysis of market data, business plans, financial history and investment partners. This analysis is then reviewed by Swedfund’s investment committee and Board of Directors.
Each investment has to meet the goals set out in our three pillars; impact on society, sustainability and financial viability.
If you have any questions or would like to discuss an investment proposal, please contact one of our Senior Investment Managers!