Investment Procedures, Policies & Criteria
FMO offers tailor-made financing. We advise companies with investment plans to contact us at the earliest stage possible to discuss their plans.
In evaluating an investment request, the project itself is looked at initially. Important aspects are:
- commercial viability
- a sound investment plan
- a thorough feasibility study and complete analysis of the market
- transparency according to the principles of corporate governance
- a respectable environmental policy
- execution by internationally acceptable social standards.
Furthermore, the owner or sponsor of the project to be financed is considered. The important factors are that it:
- is financially healthy
- has a proven track record
- is being guided by an expert, experienced and ethical management.
1. identifying clients with sound investment plans, often with or through a global or local partner;
2. appraising the plan for financial soundness and multiple bottom line impact.
All appraisals include the client’s potential positive or negative effect on social, environmental and governance conditions. These are recorded on the so-called FMO scorecard. Appraisal further includes an evaluation of the client’s perception of these components and their willingness and ability to address them. We will only proceed with a transaction if the client is committed to ultimate compliance with international standards;
3. preparing the financing proposal for approval by relevant FMO Committees and Management Board.
As far as possible, financing structures are tailored specifically to the client’s needs and will usually include more than one financial product or service, also based on the multiple bottom line preconditions. By the time a proposal has reached the approval stage, it has already been reviewed and scored against these preconditions;
4. once approved, the contract is prepared and must incorporate social, environmental and governance requirements. In those cases where the client is unequipped to meet these requirements on signing, an action plan is developed. Contracts include clear terms and conditions;
5. monitoring – based on the scorecard, progress is monitored throughout the lifetime of the investment. We will step in if action plans are not pursued according to contract;
6. evaluating impact – impact does not occur overnight. It takes time. Evaluations are carried out after five years, or on exit from a transaction.