Investment Guarantee requirements and conditions
What does an 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 situationin 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 or up to five years.
Who is eligible for an Investment Guarantee?
Two price examples (fact box):
- Biogas plant for Thailand: 0.8% p.a.
- Fish fodder plant for Egypt: 1.1% p.a.
Danish companies investing in foreign companies or setting up subsidiaries of their own are eligible for an Investment Guarantee. The Danish company must own more than 50 per cent of the subsidiary throughout the repayment term of the guarantee
How large can an Investment Guarantee be?
There are no restrictions on the amount covered by an Investment Guarantee.
What is the term of the Investment Guarantee?
The repayment term is a minimum of 3 years and a maximum of 15 years.
What does EKF cover?
EKF pays compensation if your company suffers a loss on investment abroad due to political risk.
- 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.
An Investment Guarantee does not cover loss due to matters such as 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 to create economic growth in Denmark.
EKF generally pays a maximum of 95 per cent of the loss in compensation to your company. As an investor, your company must therefore cover a deductible of at least 5 per cent of the political risk.
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.