Investment Policy of the Fund

The Policy

1. The Fund shall be entitled to make investments in any asset not prohibited by the RA laws and other legal acts.
2. The Fund shall make investments both, in and outside of the RA territory.
3. The Fund shall invest in the following sectors:
   • development of tourism infrastructure;
   • energy sector, including production of renewable energy;
   • development of energy infrastructure;
   • mining;
   • reprocessing of minerals;
   • metallurgy;
   • food and light industries;
   • residential construction.
4. The Fund shall make investments in the following manners:
   • investments in the charter (share) capital;
   • provision of loans, including mezzanine financing and subordinated loans;
   • purchase of bonds, including state bonds;
   • purchase of real estate.
5. The Fund may invest as in charter (share) capital of operating companies, as well as in startup companies.
   • 5.1. The Fund shall be entitled to invest in the charter (share) capital of an operating company if the latter meets the following requirements:
     • The net profit margin for the last five years is positive;
     • It was audited and a positive audit conclusion is available;
     • It has a management system;
     • The accounting is in compliance with the international financial reporting standards;
     • The ratio of accounts payable and equity is lower than 30%.
     5.2. The Fund shall be entitled to invest in the charter (share) capital of a startup company if the latter meets the following requirements:
     
     • A clear business plan is available;
     • At least 5% annul profitability is expected;
     • The company is obliged to keep its accounting in compliance with the international financial reporting standards;
     • The company is obliged to be audited annually.
6. The Fund shall be entitled to provide loans, including the mezzanine financing and subordinated loans to companies.
7. The Fund shall be entitled to purchase bonds from companies.
8. The Fund shall be entitled to provide loans, including mezzanine financing and subordinated loans both in Armenian dram and in foreign currency.
9. The management of the Fund’s assets may be conducted through both active and passive management schemes. In both cases, investments may be short-term, midterm or long-term.
10. The Fund shall not be entitled to invest in derivative financial transactions with speculative objectives.
11. The Fund may take out credit facilities from commercial banks, credit organizations and international financial institutions.

Strategies

1. The Fund will proactively seek to invest in strategies that are broadly aligned with the Fund’s mission and that include the goals to support economic development of Armenia, integrate environmental, social, and governance criteria into the investment processes.
2. The Fund will place a particular emphasis on investment projects that are co-funded by international development partners.
3. The Fund will seek to promote public private partnership projects, as outlined in the Memorandum of Understanding Between the Government of the Republic of Armenia and the Fund on implementation of strategic programmes, signed on May 2, 2017.
4. The Fund will make investment decisions that are designed to ensure strong and effective supervision mechanisms are in place to determine the implementation and performance of the project. Such mechanisms should include prompt monitoring and evaluation (M&E) measures to assess if project performance meets expectations.
5. Another benchmark for ensuring solid investment decisions will be the requirement for a sound procurement policy. The Board strongly recommends that all projects considered for investments, where relevant, have clearly defined procurement policies in place. Such policies should be wholly aligned with the main requirements, standards outlined by relevant international best practices.