Letter from the Management Board

Last year, we launched our renewed strategy as part of our endeavours to contribute to a world in which, in 2050, nine billion people will live well and within the means of the planet’s resources. Our strategy calls on us to create a higher impact portfolio, deepen our relationships and increase productivity.

In doing so, we focus on the three prime Sustainable Development Goals (SDGs) of creating decent work and economic growth (SDG 8), reducing inequalities (SDG 10) and climate action (SDG 13). Our strategy aligns well with the recently published Investing in Global Prospects policy of the Dutch Ministry of Foreign Affairs, one of our key stakeholders. This policy aims to tackle the root causes of poverty, migration, terrorism and climate change, while enhancing the Netherlands’ international earning capacity.

Higher impact portfolio

With respect to our ambition to create a higher impact portfolio, we invested €1 billion of FMO, government and catalyzed funds in developing countries and emerging markets. Through these investments we support an estimated 175,000 jobs, which contribute to economic growth in line with SDG 8.

35% of total new commitments was in green investments. These are investments specifically aimed at renewable energy and mitigating climate change, but also support biodiversity conservation, reduce water usage and support sustainable forestry and agriculture practices. Through these investments, an estimated 414,000 tonnes of greenhouse gas emissions (C02 equivalent) are avoided, which sees us contribute towards SDG goal 13.

Furthermore, 24% of total new commitments concern investments that contribute to reducing inequalities, which is SDG 10. These investments in inclusive business focus on gender, irregular migrants and youth finance, and on investments in the least developed countries (LDCs).

Deeper relationships

In the first half of the year we also deepened relations with our stakeholders. In the first quarter, for example, FMO and NN Investment Partners achieved a first close on our joint Emerging Markets Loans Fund at USD 250 million. This fund enables institutional investors to co-invest alongside FMO in loans to financial institutions, renewable energy projects and agribusinesses in emerging and frontier markets.

We are very proud that the European Commission has selected FMO to manage the NASIRA Risk-Sharing Facility, a €75 million guarantee to back young, female and migrant entrepreneurs in Africa and countries neighbouring Europe. This means that we can make high-impact, high-risk investments that combat the root causes of irregular migration, in line with SDG 8 and 10.

FMO also measures the quality of relations with stakeholders, so that it can critically reflect on its own performance and adjust accordingly. Our Net Promoter Score – a measure of client satisfaction – stood at 68.6 in the first half of 2018, which is in line with the score in 2015 but below our target of 70. We did well on professionalism and reliability, but scored lower on lead times and the added value of training and knowledge management. Our employee engagement, meanwhile, came in at 7.2, below the industry benchmark of 7.5 and our 2017 score of 7.4.

Higher productivity

The third and final aspect of our strategy relates to higher productivity. We have continued implementing key strategic projects in the areas of business process optimisation, information management, HR change and steering metrics. These are leading to more efficient processes, higher-quality information, improved co-operation and better decision-making. This, in turn, will free up time to spend on clients and product development and give us more clarity concerning roles and responsibilities, which should improve our employee engagement over time.

Net profit for the first six months amounted to €124 million, which is lower than the €156 million reported last year. This difference is largely due to fluctuations in the euro-dollar exchange rate, which led to lower interest income, and lower returns on private equity investments compared to the same period in 2017. These were in part compensated by a release of provisions.


Looking at the second half of 2018, we have a positive outlook for most targets based on our transaction pipeline. We do see a risk of falling behind the full year target for catalysed volume, but efforts are underway to realise a pipeline and to develop an integrated approach to sourcing funds from commercial and public parties. In addition, we will continue to improve our engagement with our stakeholders. Our stakeholders are diverse and often have different views and needs. As a result the importance of thorough stakeholder management is only increasing.

Emerging markets and developing economies have experienced powerful crosswinds in recent months, due to global developments such as rising oil prices, higher yields in the United States, dollar appreciation, trade tensions, and geopolitical conflict. FMO’s portfolio is geographically well diversified and we are looking to invest in additional countries.

Having said that, we are closely monitoring political, economic and monetary developments in Turkey, where we have a sizeable €428 million exposure. Turkish volatility, and potential spill over to other emerging markets such as South Africa, Argentina and India, may impact our performance on the short term through fair value changes for the equity and sub-debt transactions of our clients.

In closing

Peter van Mierlo started as Chief Executive Officer on July 1. He joins FMO from PwC, where he was Chairman of the Board of Management of PwC Netherlands and Managing Partner of PwC Europe. Together we are dedicated to implementing our strategy and realizing a higher impact portfolio, deepening our relationships and increasing productivity.