A strong new export and investment fund for Denmark

Henrik Holst Elstrøm, Senior Director, Export and Investment Fund of Denmark (EIFO), SME International outlines the newly augmented organisation that has emerged from the combination of Denmark’s export credit agency and national promotional bank and explains its bold ambitions to grow Denmark and green the globe.

The Export and Investment Fund of Denmark (EIFO) has taken over from Denmark’s Green Investment Fund, Vaekstfonden, and EKF Denmark´s export credit agency (ECA). With the infusion of additional funds and the merger of Denmark’s national promotional bank and ECA, EIFO is now, by Danish standards, a huge fund providing Danish companies with risk-tolerant capital for growth, internationalisation, and green transition.

In Denmark, we are intensifying our efforts to create growth, exports, green transition as well as international projects which green the world.

Until 1 January 2023, the task of providing risk-tolerant capital for Danish companies and international projects were in the hands of the well-run and successful state funds: Denmark´s Green Investment Fund, Vaekstfonden, and EKF, Denmark’s ECA. Since then, the three funds have been merged with the infusion of additional funds.

EIFO is taking over the role of making a difference for Danish companies when the private market is reluctant, thereby helping to grow the Danish economy and green the globe.

We do so:

1. Through a coherent effort based on a green and international outlook
2. By supporting successful businesses and by focusing on positions of strength
3. By proving that the green transition and good business can in fact go hand in hand.

A good starting point to do more

EIFO’s ambition is to provide Danish companies with more services and solutions and to promote the green transition and fair trade. We will therefore build on the knowledge and competencies accumulated by each of the three funds.

EIFO has a solid foundation. We have approximately 500 dedicated employees handling approximately 5000 customers covering large corporates as well as SMEs. With a total balance of DKK61 billion in 2022 and an active portfolio totalling DKK147 billion, we are, by Danish standards, a huge fund with substantial power which allows us to make a difference for companies.

Great potential for SMEs

The SME department in EIFO consists of 150 employees managing 90% of all customers, however, covering only 10% of EIFO’s business volume. Nevertheless, for Denmark, this is a segment with great potential. Shortly after the merger of our three funds, we drew up a strategy for the SME sector incorporating six main concepts to support EIFO’s core objectives:

• Focus on life cycles and Denmark’s positions of strength
• Ambitious and sustainable financing solutions
• Financial sustainability
• Focus on exports through international energy and infrastructure projects
• Targeted expert knowledge
• Accessibility.

During the process, we identified three key focus areas:

• Agrifood
• Energy
• Digital platforms

We estimate that within the next 10 years, these sectors will show a great potential which EIFO could help to develop with a focused effort. We have therefore established three separate departments to support companies from these sectors by offering them risk-tolerant capital and competencies.

Exports are essential to Denmark

Denmark is a small open society which is 100% dependent on exports to maintain its welfare standards. It is therefore essential for EIFO to offer even more support to Danish export companies. Within the SME sector, this task is in the hands of SME International which aims to build up ever more knowhow about the needs and potential of SMEs by connecting them to large projects abroad and by improving our services to export companies, either in connection with specific financing solutions or through constructive feedback.

SME International´s toolbox consists both of traditional ECA solutions and also new possibilities via direct lending. Companies that do not form part of the three focus areas and that are not internationalising will be managed by the two departments in the eastern and western part of Denmark, where the employees have strong local knowledge and who are therefore close to both business partners and companies.

Customers’ actual needs

Companies have diverse needs in terms of capital requirements and constructive feedback depending on the stage of their growth journey. In the future, our customers will be placed in different segments according to the stage they are at in their life cycle. We have divided them based on three life cycles:

• Entrepreneurs
• Growth companies
• Mature companies

Our ambition is to enhance the growth potential of a company, namely a growth company, by offering the right support at the right time to help develop that company’s potential. It could be either through financial solutions or non-financial solutions such as green transition solutions and guidance to relevant funds.

Green transition initiatives

As we have a strong focus on the green transition in the new fund, we will, to a greater extent, ensure that the companies we support incorporate sustainability into their transactions. We will also offer cash incentives to those that promote green transition.

Moreover, companies must also ensure that their business model is relevant and long-lasting. If the company does not have a systematic approach to the green transition, the company will most likely not survive the next five years. EIFO has a special mission in this connection. Soon, we will look into new financing solutions promoting the green transition.

Customisation of our products

EIFO’s role is to finance risks that the private market is reluctant to assume or only partially accept. In June 2023 we continue to work with products from the three previous funds consisting of:

• Direct lending
• Responsible subordinated loans
• Bond guarantees
• Working capital
• Capital expenditure guarantees
• Insurance solutions

Therefore, we will continue to offer a combination of direct lending to companies and direct coverage of the bank’s risk via guarantees from EIFO. In cooperation with companies and banks, we will customise and offer unique and individual financing solutions targeting specific challenges.

During the second half of 2023 we will focus on the important task of customising our products, making it easier to become EIFO’s customer and business partner. At the same time, we wish to offer even more products and services, a task which requires creativity, courage, and hard work.

EIFO works best with good business partners

For EIFO to fulfil our core purpose and strategy, it is essential that:

• The company and our business partners have a thorough knowledge of EIFO and our solutions
• We are easily accessible and that it is easy to be a customer of EIFO
• The solutions we offer do in fact make a difference to companies.

Our 150 SME employees around the country are working hard to meet the above goals. They are close to the companies via their banks, accountants, investors, and industry associations, etc.

Our most important suppliers of new transactions vary from segment to segment. In the entrepreneurs’ segment, investors are the main suppliers, whereas banks are the most important suppliers in the of matured companies’ segment.

This is why EIFO approaches the various segments and focus areas in different ways and the merger has offered EIFO even more opportunities and weight in this regard.

New Customer Centre offers companies better solutions

EIFO is to a great extend driven by networks and personal relationship with local employees. However, to offer a unique customer experience to those companies and networks who have yet to form a relationship, we have established a new Customer Centre consisting of experienced advisors who can manage and screen overall inquiries and ensure that the company obtains the right products quickly and easily.

To make things simpler and more manageable, we have established an EIFO customer portal on eifo.dk where companies and banks can submit online applications and forward relevant materials. All this is carried out within a closed and secure setting. The customer team can then offer a preliminary evaluation of whether EIFO can help the company in question. Moreover, additional materials can be gathered and exchanged easily.

All this means that by the time the inquiry reaches our underwriters, its relevance has become more evident which will allow our underwriters to spend time only on cases with the highest probability of finding a solution relevant to both parties.

Implementing the strategy

One of EIFO’s success criteria is to be regarded as being easily accessible to our customers. We also want to offer our customers a sense of progress, efficiency, and a value-based approach. The Customer Centre and the customer portal play a key role in this context.

EIFO has come a long way with our new SME strategy but until Q4 2024, 17 different project paths will be implemented, each one being essential to the realisation of the strategy and EIFO’s core purpose. Although we have already come far, plenty of hard work and tough decisions await us. But the target is in sight and EIFO will make sure that Danish SMEs obtain the capital required to grow Denmark and green the globe.