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Investment Guarantee

An Investment Guarantee can provide protection against loss for Danish companies setting up subsidiaries in countries with political instability.

  • Advantages of Investment Guarantee

    Set up subsidiaries abroad
    An Investment Guarantee enables you to invest in subsidiaries and expand in countries with political instability.
     
    EKF pays compensation for loss
    EKF will pay compensation if political problems resulting in loss to your company should arise in the country.
    Easier access to bank financing
    An Investment Guarantee entails that EKF assumes the risk that political conditions make it difficult or impossible to operate a business.
     
    Backed by the Danish government
    In the event of loss, the demand for payment is backed by the Danish government. That makes a difference when claims are to be recovered.
  • What is Investment Guarantee?

    ​When you operate in countries with less stable political, economic or social environments than in Denmark, you may find yourself in situations beyond your control.

    - For example, the outbreak of war or civil war may prevent business operations from continuing. Or the company’s assets may be destroyed.
    - Another example could be that the national authorities take control of the company by expropriation, nationalisation or other interventions.
    - Or maybe it becomes impossible to transfer the company’s funds out of the country.
    ​In such instances, an Investment Guarantee is a kind of insurance that covers your loss.

    As with all other insurance, we hope you will not need it. But backed by the Investment Guarantee, you have solid cover to invest in markets you would usually avoid for fear of losing your investment.

    That way, you can finance your company, while at the same time focusing on succeeding in the export markets.
  • How does Investment Guarantee work?

    Your company might, for example, be proposing to invest in a subsidiary abroad, but you are uncertain about the political risks in the country. These would include the risk of domestic political violence, government expropriation of assets, or a ban on transferring money out of the country.
    ​An Investment Guarantee protects your investment in the subsidiary abroad against the loss of assets as a result of political risks. If circumstances damage the investment, EKF will pay out compensation.
  • What does Investment Guarantee cost?

    ​EKF charges a premium for issuing an Investment Guarantee. Our premium is determined based on the overall risk of the specific investment. 
     
    The overall risk is assessed based on:
    The political situation in the country of investment: EKF assesses the risk of political unrest in your country of investment. The lower the risk of political unrest, the lower the premium.
    Industry analysis: EKF assesses whether the industry is particularly exposed in the country in question.
     
    A fixed premium may be offered for up to 5 years.
    ​Two price examples
     
    Biogas plant for Thailand: 0.8% p.a.
    Fish fodder plant for Egypt: 1.1% p.a.
  • Terms & conditions regarding Investment Guarantee

     
     

    Who is eligible for an Investment Guarantee?
    EKF offers Investment Guarantees to Danish companies investing in foreign companies or setting up subsidiaries of their own. The Danish company must own more than 50% of the subsidiary throughout the term of the guarantee.
     
    How much does an Investment Guarantee cover?
    No limit applies to the amount covered by an Investment Guarantee.
     
    What is the term of an Investment Guarantee?
    A minimum of 3 years and a maximum of 5 years.
     
    What does EKF cover?
    EKF pays compensation if your company suffers a loss on investment abroad due to political risks.

    Environmental and social sustainability requirements
    When your company's business with EKF totals more than DKK 25 million we assess your company's approach to the environment and human rights.

    ​Political risk occurs when your company’s investment in the subsidiary abroad suffers damage, for example due to war or civil war, currency shortage, intervention by authorities in the form of expropriation and nationalisation or restrictions on money transfers out of the country.
    The Investment Guarantee does not cover loss due to, e.g., devaluation or new general taxes in the country. Neither does the guarantee cover any loss attributable to the company’s normal operations.
     
    The Danish company’s investment abroad must be a natural progression of the company’s expansion and must help create economic growth in Denmark.
     
    As a rule, EKF pays a maximum of 95% of the loss in compensation to your company. As an investor, your company therefore has to cover a deductible of at least 5% of the political risk.

Advantages of Investment Guarantee

Set up subsidiaries abroad
An Investment Guarantee enables you to invest in subsidiaries and expand in countries with political instability.
 
EKF pays compensation for loss
EKF will pay compensation if political problems resulting in loss to your company should arise in the country.
Easier access to bank financing
An Investment Guarantee entails that EKF assumes the risk that political conditions make it difficult or impossible to operate a business.
 
Backed by the Danish government
In the event of loss, the demand for payment is backed by the Danish government. That makes a difference when claims are to be recovered.

What is Investment Guarantee?

​When you operate in countries with less stable political, economic or social environments than in Denmark, you may find yourself in situations beyond your control.

- For example, the outbreak of war or civil war may prevent business operations from continuing. Or the company’s assets may be destroyed.
- Another example could be that the national authorities take control of the company by expropriation, nationalisation or other interventions.
- Or maybe it becomes impossible to transfer the company’s funds out of the country.
​In such instances, an Investment Guarantee is a kind of insurance that covers your loss.

As with all other insurance, we hope you will not need it. But backed by the Investment Guarantee, you have solid cover to invest in markets you would usually avoid for fear of losing your investment.

That way, you can finance your company, while at the same time focusing on succeeding in the export markets.

How does Investment Guarantee work?

Your company might, for example, be proposing to invest in a subsidiary abroad, but you are uncertain about the political risks in the country. These would include the risk of domestic political violence, government expropriation of assets, or a ban on transferring money out of the country.
​An Investment Guarantee protects your investment in the subsidiary abroad against the loss of assets as a result of political risks. If circumstances damage the investment, EKF will pay out compensation.

What does Investment Guarantee cost?

​EKF charges a premium for issuing an Investment Guarantee. Our premium is determined based on the overall risk of the specific investment. 
 
The overall risk is assessed based on:
The political situation in the country of investment: EKF assesses the risk of political unrest in your country of investment. The lower the risk of political unrest, the lower the premium.
Industry analysis: EKF assesses whether the industry is particularly exposed in the country in question.
 
A fixed premium may be offered for up to 5 years.
​Two price examples
 
Biogas plant for Thailand: 0.8% p.a.
Fish fodder plant for Egypt: 1.1% p.a.

Terms & conditions regarding Investment Guarantee

 
 

Who is eligible for an Investment Guarantee?
EKF offers Investment Guarantees to Danish companies investing in foreign companies or setting up subsidiaries of their own. The Danish company must own more than 50% of the subsidiary throughout the term of the guarantee.
 
How much does an Investment Guarantee cover?
No limit applies to the amount covered by an Investment Guarantee.
 
What is the term of an Investment Guarantee?
A minimum of 3 years and a maximum of 5 years.
 
What does EKF cover?
EKF pays compensation if your company suffers a loss on investment abroad due to political risks.

Environmental and social sustainability requirements
When your company's business with EKF totals more than DKK 25 million we assess your company's approach to the environment and human rights.

​Political risk occurs when your company’s investment in the subsidiary abroad suffers damage, for example due to war or civil war, currency shortage, intervention by authorities in the form of expropriation and nationalisation or restrictions on money transfers out of the country.
The Investment Guarantee does not cover loss due to, e.g., devaluation or new general taxes in the country. Neither does the guarantee cover any loss attributable to the company’s normal operations.
 
The Danish company’s investment abroad must be a natural progression of the company’s expansion and must help create economic growth in Denmark.
 
As a rule, EKF pays a maximum of 95% of the loss in compensation to your company. As an investor, your company therefore has to cover a deductible of at least 5% of the political risk.
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