DHI: Investment preparation study
The subsidy program DHI (Demonstration projects, Feasibility study, Investment preparation study) aims at supporting Dutch companies in realizing the international ambitions. These ambitions can be export or investments in foreign markets; developing countries, emerging markets and developed countries. For developing countries a positive impact on sustainable developments is a condition.
The DHI program comprises 3 modules, 1 focused on investments and 2 focused on export support:
- Investment preparation study; focused on the preparation of investments of Dutch SME in foreign markets, stand alone or by joint venture.
- Feasibility study; focused on the support of export of a Dutch SME by supporting the potential client in executing a feasibility study related to the potential export;
- Demonstration project; focused on support of export of a Dutch SME by demonstrating a for the target country new technology.
The general characteristics of the DHI program, applicable for all modules, can be found in "DHI: Demonstration project- Feasibility study - Investment preparation study". Among others the following information can be found:
- DHI is a tender program;
- Only Dutch SME's can apply;
- The maximum subsidy;
- For which countries can be applied;
- Which conditions need to be fulfilled;
- How an application can be submitted;
The specific information of the module focusing on investment support s summarized hereafter.
Investment preparation study (1)
You are a Dutch SME and planning to invest in one of the DHI countries, and you want to investigate whether this is feasible from technical and financial point of view? A DHI Investment preparation study can support you to develop a business plan based on which you can decide and acquire external financing for your investment.
With supporting these investment projects, the Dutch government aims at strengthening the economic position of the Dutch mother company (empolyment, production and export). Investments in developing country contribute to the creation of sustainable employment and transfer of know how.
The investment preparation study results in a business plan. This business plan is primarily meant for your company and besides this can be used for acquiring external financing. This external financing can originate from your bank or from investment funds. Investments funds supported by the Dutch government provide possibilities as well; Dutch Good Growth Fund (DGGF) of Dutch Trade and Investment Fund (DTIF).
In the business plan all details of the investment in the target country are included. For a bankable business plan it is important to include benchmarks for the starting points used in the business plan. The contents of the business plan can change depending on the business case. During the process of development the following subjects are taken into account:
- Market feasibility; the feasibility from point of view of sales market and supply chain.
- Technical feasibility; technology, production etc.
- Financial feasibility; cash flow, profitability, ratios, scenarios, sensitivity;
- Management and organisation; general, technical and financial;
- Risk analysis and mitigation;
- Impact on the business environment; employment creation, environment, supply chain etc.
Market research cannot be included in the DHI study. Starting point is, that market information is available and based on this can be used for describing the market and developing the market strategy. In case additional market research is needed, this needs to be finalized before the DHI study.
Based on the results of the analysis, the plans within the business plan are developed. Agriment uses an approach which is flexible and can be adjusted to the specific situation and the requirements of the client (Agriment approach). For the acquisition of external financing it is crucial to know how the future management of the new company will be implemented and by whom. Besides this a thorough risk analysis is needed with answers how the risks can be mitigated. An analysis of the impact of the investment on local developments (employment, environment, supply chain etc.) is of great importance for your company and for external financing.
- The investment of the Dutch SME (with or without local partner) needs to be ine with current activities and strategy of the company and is focused on strengthening this.
- You don't need to have a local partner with whom the investment is carried out (joint venture). An investment preparation study for a company in which the Dutch SME holds all the shares is possible.
- In case the aim is to invest with a local partner (joint venture), than the local partner needs be known. In that case a statement from the local partner is required in which he confirms that a joint investment is planned and that he will co-operate in executing the investment preparation study. The costs made by the local partner can only be subsidized in case they are invoiced to the Dutch SME.
- The Dutch SME must show that it has the capacity to contribute in the costs for the study. In case the local partner contributes in cash, these costs must be deducted from the project costs. Only the remaining amount is eligible for subsidy.
- The Dutch SME must demonstrate that the foreseen investment in principle can be financed. For this, letters of intent from the side of co-investors and financing partners need to be shown. In case of an investment in a developing country, financing with the support from the Dutch Good Growth Fund (DGGF) might be possible. In case of an investment in other countries, the support of the Dutch Trade and Investment Fund (DTIF) might be possible. In the DGGF country list the countries are included for which DGGF is applicable. For the other countries, with exception of countries included in UN or European sanction lists, DTIF is applicable.
Difference between Feasibility study and Investment preparation study?
In case of a feasibility study, the potential client for technology, capital goods or services in one of the DHI countries takes decision to invest or not. In case of an investment preparation study, the Dutch SME takes the decision whether to invest in one of the DHI countries. In case of an investment in a developing country, the project needs to contribute to sustainable local developments.
The maximum duration of the investment preparation study is 2 years. Mostly a shorter period is needed.
The maximum subsidy is € 100.000, 50% of the eligible project costs or € 120.000, 60% of the eligible project costs in case country is a fragile country or a focus country of the Dutch Goverment. The potential export should be realized within 3 years and should be minimum 10 times the subsidy amount or in case of a DGGF country, 5 times the subsidy amount. Only proven technologies, capital goods and services can be subject of the feasibility study. For DGGF countries impact on local development is an important criterion.
In case you have a concrete plan for a feasibility study complying with criteria , than you can apply during one of the tenders. You start with the elaboration and submission of a Quick-scan which is sent to RVO. .
Agriment has extensive experience in preparing successful applications for subsidy for similar programs. Additionally Agriment has extensive experience in executing feasibility studies and preparing business plans. With our contribution in terms of project coordination and management, we ensure that the granted subsidy is received based on the real time spent and costs made during the project.
In case you have doubts whether your project could apply successfully for subsidy, or you want support in formulating the Quick-scan and application and/or execution of the project, please contact us.