The separate fund, Frontier Facility, is used for projects with a higher risk than those in Norfund’s portfolio and for our most demanding markets.
One of the most important obstacles to investments in developing countries is the insufficient supply of well-prepared and investment-ready projects available to investors, including Norfund. One reason for this is that private investors often lack sufficient capital to meet the investment requirements related to project development, such as environmental impact assessments and legal and technical studies.
In 2019, Stortinget therefore granted 100 million Norwegian kroner to a new facility for project development and risk mitigation, managed by Norfund – the Frontier Facility. This facility allows Norfund to take on higher risk when investing in early phase project development and reduce risk for commercial investors in the most demanding markets, especially in vulnerable states and the Least Developed Countries (LDCs). In these countries in particular, there is limited access to risk capital for project development and risk relief.
The facility serves two purposes:
- Enabling early phase project development within Norfund’s investment areas
- Risk mitigation for commercial investors that wish to invest in Norfund funded projects, throughout the project cycle
The facility is to be used for projects with a higher risk in comparison with investments from Norfund’s ordinary investment funds. Norfund is to use these funds to invest in project development that is promising, by providing loans that can later be converted into equity if the project can be matured and is ready for investment. Through this facility, Norfund can take a higher risk of loss of funds. This means that losses through the Frontier Facility must be expected.
These projects are managed as a separate facility and are not included in Norfund’s overall portfolio valuation.
Frontier Facility projects
| Investment | Country | Sector | Year committed | Instrument | Status | Commitment (MNOK) |
|---|---|---|---|---|---|---|
| Katapult Africa Seed Fund | Africa | Scalable Enterprises – Funds | 2022 | Equity | active | 2.56 |
| NMI FLS valuta guarantee | Southeast Asia | Financial Inclusion | 2021 | Foreign exchange guarantee | active | 20.0 |
| Lobu Dolum HPP | Indonesia | Renewable Energy | 2021 | Loan | active | 8.52 |
| Antler East Africa Fund I | Africa | Scalable Enterprises – Funds | 2020 | Junior Equity | active | 13.37 |
| Arnergy Solar Ltd | Nigeria | Renewable Energy | 2019 | Equity | active | 17.56 |
| Malthe Winje Maresi | Kenya | Renewable Energy | 2019 | Loan | active | 1.74 |
| FEI – Facility for Energy Inclusion | Africa | Renewable Energy | 2019 | Junior Equity | active | 27.54 |
| WeCyclers | Africa | Green Infrastructure | 2023 | Convertible loan | active | 23 |
| Veolia | Africa | Green Infrastructure | 2024 | Equity | active | 1.7 |
| Westgass | Africa | Scalable Enterprises – A&M | 2024 | Convertible loan | active | 20.9 |
