Investment in this type of fund is a convenient strategy for reaching out to small- and medium-sized enterprises, because investment in the SME sector in Norfund’s market is challenging, and the enterprises require close follow-up. Experience shows that selected local funds managers can do this job in an appropriate manner, and contribute to creation of considerable value. Norfund has accumulated competence in selection of fund managers and establishment of appropriate fund structures.
Norfund invests equity capital in private equity funds, such as venture capital and other investment funds targeting SMEs that require growth capital and expertise. By investing in SME funds and fund managers, Norfund helps build the formal economy and strengthen local capital markets. Norfund will continue investing in SME funds, primarily through external fund management companies where Norfund is not itself an owner, and also in some cases through establishment and ownership of fund management companies where a demand has been identified in the market.
Norfund’s focus on SMEs, the willingness to invest in first-time fund managers and to establish funds and fund management companies where the demand exists, currently best represents Norfund’s key aim of being additional. Norfund cooperates with other investors to achieve greater transparency in the investment funds in terms of legal frameworks and fee structures.
Norfund invests in SME funds that have a pronounced development profile and where there is a clear lack of capital. At the same time, it remains important to mobilize private capital for fund investments. Norfund therefore invests in funds that have no access to commercial capital because of their small size, a restricted field of investment or few demonstrable results, but also in larger and more experienced funds that have little capital, to which Norfund can attract private investors.