Next to a track record in acquiring grants, EUNITE has been successful in realising private funding for investments also. Private funding mainly consists of equity, loans and export finance. In some occasions private funding had been combined with grants. However we have also realised investments that solely existed from private funding.
Often based on our investment creation services – such as creating business plans and developing feasibility studies – equity investments in projects have been realised. In many occasion different investors have been applicable for individual investment projects. And in some occasions EUNITE has been one of such investors itself also, for instance in Ukraine, in Mozambique and in the Netherlands.
EUNITE has acquired various loans both for its customers as well as for its own investment projects. EUNITE’s added value in establishing loans often consists of a combination of investment creation services, active negotiations as well as local business services. A broad variety of loans has been acquired, as explained below.
Many investment projects have been funded via shareholders’ loans. Mostly shareholders’ loans are realised in combination with equity funding, both often realised based on our investment creation services.
LEASING AGREEMENTS BANKS
In many occassions leasing agreements with banks have been included in investment projects. Such lease agreements have been facilitated both by Western as well as by local banks. Especially in logistics lease agreements are applicable that consist of agreements between Western banks and holding companies and subrental agreements to local (daughter) companies.
Regular bank loans have been realised for investment projects as well. Similar to leasing agreements, bank loans have also been facilitated both by Western as well as by local banks. Moreover bank loans have been provided not only to mother companies, but also directly to local companies (daughter companies and / or joint ventures).
In addition to common Western banks, bank loans have also been acquired from banks and / or programs that are dedicated to developing countries. Such banks are often co-owned by private banks and national authorities (such as the FMO in the Netherlands).
For high risk innovation projects, the Dutch authorities developed a risk based loan facility called ‘InnovationCredit’. This loan facility is risk based, meaning it only has to be re-paid when the innovation is successful.
Finally a less known, however a very interesting form of private funding is export finance. In general two types of export finance is available – buyer’s credit & supplier’s credit- both forms offer potential to fund investments in developing countries. With export finance, funding can be acquired directly to local daughter companies in emerging markets, however for Western interest rates. Since local interest rates in emerging markets / developing countries tend to have double digits, export finance proves to be highly interesting.
Moreover in joint ventures it is also possible to split liabilities between the various partners. So from a risk management perspective, this funding source has additional benefits.Export finance is realised by a consortium. Such a consortium consists of an exporting company, its house bank a credit finance company and a local investor.