We finance opportunities

Transcription

1 We finance opportunities

2 Our vision of development We finance opportunities During the past 50 years, DEG has initiated and assisted projects in more than 100 de vel oping and emerging-market countries. It has provided capital and contributed its experience and know-how. Most importantly, however, it has given courage: because enterprises and people who want to dare development need courage and courageous partners. Since its foundation in 1962, DEG has been actively and successfully involved on behalf of people and markets. As a member of the KfW banking group and one of the largest development finance institutions in Europe, we serve as a consultant and provider of capital to entrepreneurs who want to tap new markets with pioneering projects and products. clients profit from our many years of experience, our solid knowledge of countries and industry sectors, and our global network. In risky markets and during politically difficult periods we can be relied upon to commit ourselves for the long term. Being a part of the German Development Cooperation, we promote the cooperation of politics and business. In concert with other members of the group of the European Development Finance Institutions (EDFI) as well as the International Finance Corporation (IFC), with regional development investors and others, we are actively involved in the structuring and implementation of complex investment projects on an international scale. We promote entrepreneurial commitment by granting loans, equity capital or guarantees. Our

3 Our vision of development The courage to take risks A promising future Promoting the private sector plays an important role in development policy on an international level, too, as this pillar of cooperation in development policy contributes significantly to sustainable growth, jobs, income formation and knowledge transfer. It also takes the burden off government budgets, as it mobilises sizeable funds from the private sector for this purpose. Every year, development finance institutions allocate nearly EUR 40 billion to private com panies. For this reason DEG, together with its international partner institutions such as EDFI, endeav ours to further strengthen the impact of devel opment work with enterprises and to publicise it more. In the years to come, DEG will continue to intensify its support in terms of quantity and quality in order to seize new opportunities and shoulder risk jointly with the enterprises. In all these efforts it will remain true to its roots: its focus will remain on the collaboration with medium-sized companies. More support is to be provided for German companies in their international commitment. In the future, DEG wants to provide equity capital, which is partic u - larly scarce and in demand in developing countries, for specific investments. Another important strategic objective is the support of investment projects in Africa. Furthermore, climate and environmental protection projects continue to have special priority.

4 Our vision of development Successful for the local population Especially in times of global economic turbulence, funders who are willing to take risks are needed. DEG will continue to demonstrate its special courage to take risks in the future and allow companies to make investments. The com mitment of DEG is already considered an international seal of quality. It thus also encourages other investors to invest in developing and emerging markets. Collaboration among companies creates jobs and income, improving the living conditions of the local population. We make sure that all investments have a positive impact on the respective country and make a sustainable contrib u- tion to progress. We are a partner of enterprises that take greater risks and accept greater challenges in their commitment to developing and emerging markets. In order to realise their plans, they often have to make additional investments, for instance in local infrastructure, education or medical care for their staff, their families and neighbouring communities. With approximately EUR 1.2 billion in new commitments in 2011 alone, around 240,000 jobs will be created or secured. The co-financed companies generate about EUR 700 million in net foreign currency earnings per year, probably boosting government income in the partner countries by approximately EUR 780 million per year with their tax payments. With our commitment we contribute to the millennium development goals, the joint obligation of industrial and developing nations to sustainably reduce poverty.

5 Our vision of development Profitable, environmentally and socially compatible The goal of DEG is economic success and approp riate growth in the long term. Precise an a- lyses, tested assessment methods and the expertise of its staff are the factors that ensure DEG s success. Its clients are just as successful. DEG s financing activities promote the development of companies and also allow them to overcome dry spells. In all its projects, DEG places great importance on sustainable commitment. It supports compliance with local as well as international environmental and social standards. These include the Performance Standards of the International Finance Corporation (IFC) and the Core Labour Standards of the International Labour Organ - ization (ILO). We evaluate and control the quality of our financial investments as business and development policy measures by way of a rating instrument that was especially developed for this purpose: the so-called Corporate Policy Project Rating (GPR) has proven efficient for years and is also used by our cooperation partners. DEG furthermore pursues its objectives at home, in Cologne: the company headquarters in Kämmergasse, for instance, is managed in accordance with the latest environmental stand ards, and DEG also fosters good working con ditions in-house. It is actively involved in education, staff and manager development, and promotes the compatibility of job and family. As another pillar of sustainable investment, DEG promotes transparency and the battle against corruption. It is a member in such initiatives as Transparency International and EITI (Extractive Industries Transparency Initiative), which wants to reveal the revenues from the extraction of raw materials. Along with 25 other development finance institutions, DEG signed a Corporate Governance Development Framework in 2011, whose signatories pledge to jointly promote transparent company management in project companies.

6 The history of DEG Towards a new future in Africa I am convinced, in the very depths of my brain, that economic cooperation and cooperation in education are going to improve the outlook of the developing nations. Walter Scheel The history of DEG 1962 What today is called DEG is founded as the German Association for Economic Cooperation in Cologne on 14 September The concept is developed by Kai-Uwe von Hassel, Minister President of Schleswig-Holstein at the time, together with Walter Scheel, Germany s first minister for development aid. Both have already been actively involved in development policy since the 1950s. Von Hassel grew up in East Africa, witnessed the struggle for independence of the former colonial nations, and now endeavours to advance their economic development with passion and foresight. Walter Scheel runs two companies which operate on an international level. Both travel extensively in Africa and are well connected with important people in politics and business. The idea of the founders: the federal corpo r- ation DEG is to support the nations of the Third World, as it is called at the time, in building the private sector and to assist German medium-sized companies as they move into the international markets. Initially the focus is on Africa. The first project is the foundation of an association for financing small production plants together with the Ministry of Economic Affairs in Tanzania. DEG is not yet prepared to fund the big big steelworks which the permanent secretary there wants. In the beginning it focuses on the support of smaller companies in the processing industry.

7 Demonstrating endurance Tapping new markets During the first ten years, DEG invests 171 million Deutschmarks in the foundation of 120 enterprises in 40 countries not yet at its own risk, but with funds from the Federal Ministry for Economic Cooperation. Initially 30 DEG employees work at Habsburgerring in Cologne. The early years prove difficult, and DEG has to demonstrate patience, persistence and endurance in accomplishing its task. The financing format imposed by the federal ministry is that of joint ventures with German companies. To this end local partners have to be found. It is a demanding concept, as the general circumstances in most partner nations are difficult. DEG remains steadfast and steers around the obstacles: it increasingly funds the establishment of small and medium-sized companies through holdings in local development banks, thus creating jobs and income for more and more people: by 1982, over 125,000 jobs have been created in 64 countries. Due to the worldwide recession at the beginning of the 1980s, public funds become scarce. DEG reacts to this situation with a major reform: it turns from a sponsor of development into a finance institution, with international bank standards serving as guidelines in this process. In order to ensure the profitability of its projects, it develops its own evaluation methods. From now on it finances loans at its own risk, increasingly raising funds in the capital market to this end. It also taps new markets: without the federal government s requirement that only projects can be supported where German companies are involved, DEG develops new business objectives until the end of the 1990s. It gets involved in south-south cooperation and infrastructure projects since 1990 also in the transformation countries of Eastern Europe and the former Soviet Union. There it accompanies the transition from planned to private economy by extending credit to local banks and providing direct funds to German and local companies. The association establishes its own offices in the partner countries in order to provide better local support. The restructuring efforts pay off. At the end of the 1990s DEG commits the equivalent of approx. EUR 360 million in new funds per year.

8 The history of DEG 2008 DEG as a member of the Kf W banking group The new central office in Kämmergasse Since 2001 DEG has been a member of the KfW banking group. The association is thus an in tegral part of the international project activities of the KfW banking group and IPEX provision of funds for exports and investments as well as its financial cooperation with developing nations, which also includes investments in infrastructure, education and health DEG benefits considerably from being a part of KfW: thanks to KfW s good credit rating, it gets better terms in the capital market, and the joint use of what have become more than 50 representative offices abroad facilitates the local support for investors. These positive effects give a fresh boost to the financial assistance: between 2005 and 2007, the new commitments of DEG doubled from EUR 672 million to 1.2 billion. In late 2007 DEG has approximately 380 employees who are distributed over three locations in Cologne. The company needs more room and wants to gain visibility in Cologne, DEG is less well known than in the rest of the world. By 2008, DEG s new central office is built in Kämmergasse based on designs of the architectural firm JSK: 14,500 square metres, 450 workplaces, conference rooms, an archive and a cafeteria. Only 250 metres from the central shopping district and a must for Cologne residents with a view of the cathedral. DEG wants to set highlights of urban development with the new building and convey a cosmopolitan mindset as well as transparency. Wide glass facades and a convertible roof establish the connection between inside and outside. Inside, modern office architecture meets art from partner countries which is also visible for passers-by outside and receives curious com ments. Now and again visitors come in who do not work with DEG: for instance for the lit.cologne, when DEG gives a platform to authors from its partner countries and members of the public from Cologne and elsewhere who are interested in literature, thus contributing to cultural exchange.

9 The history of DEG Giving consultation and assistance When DEG funds activities, it not only provides capital. It gives its clients comprehensive advice concerning all aspects of their investment planning: profitability, financial structure and financial management as well as environmental and social compatibility. In order to master the diverse challenges in developing and emerging markets sustainably, DEG also offers companies various support programmes which are financed with public federal government funds, money from other public and private financiers such as the development organisation USAID and the Bill & Melinda Gates Foundation as well as DEG s own funds Since 2009, for example, DEG has conducted a programme in the Sub-Saharan region in Africa whose purpose is to boost the competitiveness and income of 265,000 cotton farmers. It promotes pilot projects in climate-friendly technol ogies and programmes for the improvement of energy efficiency and health protection. Part of a European and international network In 1992 DEG is the driving force behind the foundation of the European Development Finance Institutions (EDFI), an association with 15 members from European countries. The network is being steadily enlarged. Today we pool fund ing schemes and know-how, check and assist projects jointly and share risks making sure the investments are going to be safe in the long run. DEG is also well connected at an interna tional level, e.g. with the World Bank subsidiary IFC and other international financiers such as the African Development Bank.

10 Our clients: innovative in local markets Accra, Bangkok, Beijing, Istanbul, Jakarta, Johannesburg, Lima, Mexico City, Moscow, Nairobi, New Delhi, São Paulo and Singapore. Foreign DEG offices: Individual products for innovative clients DEG s clients come from all different industry sectors: agriculture, the processing industry, the service sector, the infrastructure and the finance sector. They produce cotton or batteries, pharma ceuticals or milk, cement or sugar. They build banks or wind power plants. They invest all over the world, thus generating jobs and income. The clients include German medium-sized enterprises, local enterprises as well as local banks that issue loans to local entrepreneurs. Their investments allow DEG s clients to seize opportunities in future markets. To this end they take risks and need a finance partner who, like themselves, is interested in long-term success and for this reason is also willing to bear risks jointly. DEG s investment managers therefore assist and advise their clients from the start. They do so even during difficult periods. The staff members in Cologne work hand in hand with the local representative offices abroad. They are also reliable partners during politically precarious times and when there are setbacks. The clients profit from the many years of experience, the DEG experts solid knowledge of the different countries and industry sectors, and their worldwide network. DEG structures and arranges complex projects in co operation with other development finance in stitutions or banks.

11 Our lending activities: reliable in the long term Individual products for innovative clients Risk capital Loans Programme-based financing Complementary measures About 40 per cent of the DEG projects are equity participations: DEG purchases shares of the company in the investment country. It never assumes the role of majority shareholder. In most cases it has a seat in the company s supervisory committee. The company benefits from the advice and reputation of DEG. Another form of risk capital is mezzanine finance: similar to shareholding, this flexible instrument increases the equity capital of the financed company. In about 60 per cent of the projects, DEG loans the project companies money usually in euros or dollars. The ceiling for loans is EUR 25 million, and their term is typically between four and ten years. Guarantees If a company wants to get a loan in the local currency, the local loan can be secured by a DEG guarantee. This largely eliminates currency risks. DEG implements the Public-Private Partnership Programme (DeveloPPP.de) of the Federal Ministry for Economic Cooperation and Devel opment (BMZ) on behalf of the German government. DeveloPPP.de is geared towards Western European enterprises which realise a project that goes beyond their corporate objective and has special significance in terms of development policy. DEG assumes up to 50 per cent of the financing of a PPP project, to a maximum amount of EUR 200,000. For example, it supported a tourism company in Namibia that established a cooking school. Or DEG implements the Climate Partnerships with the Private Sector programme for the German Federal Ministry for Environ ment, Nature Conservation and Nuclear Safety (BMU). In addition to project financing, DEG makes possible accompanying consultation and training programmes in order to support enterprises in their commitment to sustainable development, for instance in the fields of education, health, transparent corporate management or environmental protection.

12 Individual products for innovative clients 1,200 DEG in figures Year founded 1962 Shareholder KfW banking group Rating of KfW AAA/Aaa Equity capital EUR 1.7 billion Annual DEG financial commitments from 1962 to 2012 in million euros 900 Balance sheet total Portfolio Total investments/portfolio EUR 4.37 billion EUR 5.6 billion EUR 39 billion (investments of the co-financed enterprises) 600 Jobs created 240,000 Projects 549 Partner countries Number of employees 457 Last revised:

13 Asia: EUR 418 million Europe: EUR 186 million MENA: EUR 44 million Latin America: EUR 348 million Sub-Saharan Africa: EUR 219 million DEG s representative offices abroad New commitments in 2011

14 Individual products for innovative clients Investing in future markets Finances Infrastructure Industry Agriculture The focus of DEG s financing activities is on the financial sector. We supply capital to banks and other finance institutions in order to improve the range of financial services for enterprises in the partner countries. This also allows local small and medium-sized companies to invest. Moreover, we assist our partners in implementing international standards of good corporate governance. DEG provides funds for infrastructure projects which are developed, built and sold privately. These include, amongst others, projects in energy supply, traffic, telecommunications, health and education. Climate protection is a special concern of ours. We promote projects which improve energy efficiency as well as projects in the field of renewable energies such as wind farms, solar projects and geothermal energy plants. Concerning investments by industry and the processing sector, DEG supports the transfer of technology and knowledge, and it contributes towards creating qualified jobs among other fields, in pharmaceutical production, the building materials and recycling industries. DEG invests in agricultural production, further processing and food logistics as well as storage and transport, thus making a contribution towards food and nutrition security. Small farmers are integrated in approximately 50 per cent of DEG s agricultural production projects.

15 DEG Deutsche Investitions- und Entwicklungsgesellschaft mbh Kämmergasse Cologne, Germany Phone Fax Photo credits: Africa Interactive/Shubhangi Sing: page 2 ich.tv: pages 4, 6 left and 22 André Vieira: page 6 right Africa Interactive/Ricardo Alvarez: page 9 DEG Deutsche Investitions- und Entwicklungsgesellschaft mbh: pages 10, 12, 13 Werkstudio : Werbung und Design GmbH: page 14 left Thomas Brill: page 14 right Getty Images: page 17 Marc Shoul: page DEG klimaneutral