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Norwegian companies involved in developing climate-friendly energy technologies have a valuable ally in Eksfin.
Eksfin is short for Export Finance Norway - and it's a public body that offers financing and risk-sharing solutions to businesses with export potential. To facilitate easy access and guidance for such companies, Eksfin recently established an office in Stavanger within Smedvig's premises in Løkkeveien 111.
– Eksfin strategically focuses on several areas, including offshore wind, green maritime, and other green industries. This focus allows us to extend our support within the defined scope and assist these sectors even further. Eksfin has some extra flexibility when it comes to climate-friendly projects as long as there is potential for export, sais Senior Client Executive, Joar Johnsen.
We’ll come back to what is meant by potential for export.
During the initial stages of business development, it is Innovation Norway that serves as a crucial component of the Norwegian support system. As companies progress and achieve a high Technology Readiness Level (TRL) and become eligible for bank loans, the involvement of Eksfin becomes particularly relevant.
So, what does Eksfin actually do?
Let's consider a hypothetical scenario where Company A aims to sell its products abroad and requires financing.
Typically, a company would involve a bank. The usual practice is for the company to contribute equity, and in addition finance its activities with loans from a bank. Banks are concerned about risk and ensuring the repayment of the loan with interest.
If Company A is a growth-oriented company with potential, the bank assumes more risk by providing a loan than compared to standard businesses. Normally, banks cover 100% of the loan, bearing the full risk.
– In uncertain projects, like renewable energy where the technology is new and untested, there would typically be higher risk of failure and the loan's interest rate is increased to compensate for the potential loss. However, if the bank can reduce the credit risk by for example 50%, there is an increased likelihood of the bank granting the loan. This is where Eksfin steps in as an equal partner with the customer's bank and helps increasing the bank’s lending capacity, says Johnsen.
During the loan or guarantee process, Eksfin can engage with the company, but the company's bank must be on board. Determining the export potential involves close collaboration between the three. Together they assess the likelihood of the customer's future predictions being realistic.
Market conditions, technology, and industry factors are taken into consideration when making the decision. But many of these markets, such as hydrogen, ammonia and batteries, are not fully established yet.
– So, we have to look at the potential to be a part of them. And if we are to follow the government's guidelines regarding the environment, someone needs to offset some of the risk from the banks in that regard. And that someone could be Eksfin, says Johnsen.
What is meant by export potential?
When asked about the meaning of export potential, the key word highlighted in relation to climate friendly investments, was "potential” not "export." Eksfin assesses the potential of a company to achieve its goals at the moment that the loan is granted. And it's important to note that Eksfin does not conduct revisions, as potential cannot be audited.
– If the assessment is positive, Eksfin stands by that decision. Even if the projections do not materialize, says Linn Camilla Bakkefjell Lie, Head of Renewable Energy and Industry at Eksfin, and continues:
– Our commitment to finance a project is based on a thorough analysis of the credit risk, environmental, social and governance aspects. Once we say yes, we don't go back on that decision even if the predictions related to export potential turn out to be lower than expected.
Added value for exporting companies
Another noteworthy factor is the added value Eksfin offer to customers when it comes to export, as one of their products allows exporters to enhance their marketing efforts by leveraging Eksfin's financing capabilities.
– If an exporter sells to an international customer, we can collaborate with a foreign bank to provide a loan to the buyer. In this arrangement, the buyer’s bank needs to assume some of the risk whilst Eksfin assumes the rest, says Johnsen.
It is important for Norwegian companies to be aware of this opportunity and incorporate it into their marketing strategies. Only a few foreign customers are aware that they can request a loan from Eksfin.
How do you define "climate friendly"?
– We base our definition of climate friendly on the EU taxonomy. But it's important for us not to make it intimidating to contact us. Companies don't need to assess if their project is "environmentally friendly enough" for Eksfin; that's our job.
We want to talk to everyone, says Johnsen, who is reachable via +47 99 08 29 20 or firstname.lastname@example.org.
If your company has financing needs and export potential, get in touch with Eksfin and tell them about your needs.
They are friendly, approachable and will help you assess the situation and explore suitable solutions from their toolkit for your individual company.