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Extend Your International Reach with OPIC - Financing and Insuring Investment in Emerging ... Support U.S. private investment in more than 150 emerging markets and ...

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Overseas Private Investment CorporationInternational Trade Association of Greater Chicago March 16, 2005 Chicago, IL

Extend Your International Reach with OPIC -

Financing and Insuring Investment in Emerging Markets and Transitioning Economies

Presented by:

John Moran

Director – Investment Development

Central and Eastern Europe

Overseas Private Investment Corporation (OPIC)

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OPIC’s Goals and Objectives

  • Support U.S. private investment in more than 150 emerging markets and transitioning economies throughout the world

  • Assist in the economic growth by facilitating private investment in projects sponsored by private enterprises

  • Operate on a self-sustaining basis by supporting commercial viable projects on commercial terms

  • Do not compete with the private sector

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OPIC Priority Regions and Sectors

  • Mexico

  • Middle East and North Africa, including Afghanistan and Iraq

  • Sub-Saharan Africa

  • Small Business

  • Housing

  • Tsunami-affected reconstruction

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Recent OPIC Supported Projects

  • Bechtel/Croatia Motorways – Croatia

  • Hamma Water Desalination - Algeria

  • WapCo Gas Pipeline - West Africa

  • Investment Funds for Mexico and Latin America

  • Natural Gas Pipelines in Egypt and Israel

  • Hydropower Facility in Kosovo

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Basic OPIC Programs

Facilitate U.S. investment and participation in projects by providing:

  • Political Risk Insurance

  • Project Finance

  • Investment Funds

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Eligibility forOPICPrograms

  • Investor

  • Project

  • Investment

  • Country

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  • New projects, expansions, acquisitions and/or privatizations

  • Electric power facilities (finance and/or insure new facilities; insure renovations)

  • Oil and gas field development (Can insure, but not finance exploration activities),and oil and gas pipelines

  • Infrastructure, including roads, ports, railways, and other private-sector controlled infrastructure

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  • Economically sound, commercially viable, private sector project

  • Positive development effect

  • No negative effect on U.S. economy

  • Limited government participation (or at least private sector management control)

  • Environmentally sound

  • Internationally recognized worker rights enforced

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Countryand Regional Focus

  • Active in Iraq, Afghanistan, Mexico, Central and Eastern Europe, and Eurasia

  • OPIC’s only overseas offices is in Moscow

  • OPIC has sponsored country and regional investment conferences in:

    • Andean region (Lima, 2001)

    • Serbia (Belgrade, 2003)

    • Emerging Europe (Bucharest, 2004)

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Investment Insurance: Protecting U.S. Investors from Real or Perceived Political Risks

  • Currency Inconvertibility

  • Expropriation

  • Political Violence, including Terrorism coverage

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  • Expropriation, nationalization or confiscation

  • “Creeping” expropriation

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KeyFeaturesofOPIC Insurance

  • Policy terms up to 20 years

  • Premium rates are locked in

  • May be canceled by insured,but not by OPIC

  • Up to $250 million in coverage available per project; no lower limit

  • Important protection for small and medium sized businesses

  • Can help attract additional financing and business support

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Benefitsof OPIC Insurance

  • Discourages arbitrary actions by host government

  • OPIC can play an advocacy role

  • Provides comfort to banks, suppliers and shareholders

  • OPIC reserves exceed $4 billion

  • Full faith and credit of the United States

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Investment Finance: Lender of Last Resort for U.S. Investors When Private Sector Financing Is Not Available

Characteristics of OPIC finance:

  • Limited recourse, long-term finance for private sector, commercial projects

  • Loan amounts up to $250 million

  • Variety of financial structures which require only 25% U.S. equity in project to qualify for OPIC support

  • Can co-finance with IFC, Regional Multilateral Banks (ADB, AfDB, IADB, EBRD), commercial banks and ECAs like EXIM

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Investment Finance

Important considerations:

  • Projects must be controlled by private sector

  • Sound financial plan

  • Cash flow adequate to service debt

  • Partners must have strong track record in same or similar industry

  • Significant collateral and the ability to provide adequate project completion support

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Structure of OPIC Finance Support















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OPIC Small Business Center --Overview

Important Factors:

  • 60 daysfrom complete application to approval

  • U.S. business sponsor < $35 million in annual consolidated revenues or $27 million in personal net worth

  • Loan amounts from $100k to $10m (viable business plan and successful track record)

  • Insurance coverage up to $15m

  • Must adhere to all investment policies

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Investment Funds: Access to equity for the best local companies

Innovative Use of OPIC Support

  • OPIC does not take direct equity in projects

  • Fund managers make investment decisions

  • Can work in conjunction with OPIC insurance and finance

  • 36 OPIC Funds (incl. Approvals)

  • Nearly $3.0 billion in commitments

  • Invested in 53 Countries and 385 Portfolio Companies

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  • Strong track record in mobilizing new investment capital -- FDI and domestic

  • Very active in support of private investment in post-conflict reconstruction economies

  • Focus on Small Business

  • Support for Public-Private Partnerships to finance infrastructure, (e.g., water, waste management, transport/roads)

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Overseas Private Investment Corporation

1100 New York Avenue, N.W.

Washington, D.C. 20527-0001 USA

Tel. (OPIC/USA)+1 202 336-8674

Fax +1-202-408-5155

E-Mail: [email protected]

Internet: www.opic.gov