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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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Presentation Transcript
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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)

opic s goals and objectives
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
opic priority regions and sectors
OPIC Priority Regions and Sectors
  • Mexico
  • Middle East and North Africa, including Afghanistan and Iraq
  • Sub-Saharan Africa
  • Small Business
  • Housing
  • Tsunami-affected reconstruction
recent opic supported projects
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
basic opic programs
Basic OPIC Programs

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

  • Political Risk Insurance
  • Project Finance
  • Investment Funds
eligibility for opic programs
Eligibility forOPICPrograms
  • Investor
  • Project
  • Investment
  • Country
project eligibility
ProjectEligibility
  • 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
project requirements
ProjectRequirements
  • 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
country and regional focus
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)
investment insurance protecting u s investors from real or perceived political risks
Investment Insurance: Protecting U.S. Investors from Real or Perceived Political Risks
  • Currency Inconvertibility
  • Expropriation
  • Political Violence, including Terrorism coverage
expropriation coverage
ExpropriationCoverage
  • Expropriation, nationalization or confiscation
  • “Creeping” expropriation
key features of opic insurance
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
benefits of opic insurance
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
investment finance
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
structure of opic finance support
Structure of OPIC Finance Support

OPIC

Insurance

OPIC Loan

U.S.

Sponsor

U.S.

Banks

Project

Company

Local

Financing

Project

Local

Sponsor

opic small business center overview
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
investment funds access to equity for the best local companies
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
conclusion
Conclusion
  • 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)
for more information
ForMoreInformation

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

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