Doing Business With OPIC. OPIC’s Mission Statement “To mobilize and facilitate the participation...
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Transcript of Doing Business With OPIC. OPIC’s Mission Statement “To mobilize and facilitate the participation...
OPIC’s Mission Statement
“To mobilize and facilitate the participation of the
United States capital and skills in the economic and
social development of less developed countries and
areas, and countries in transition from nonmarket and
market economies, thereby complementing the
development assistance objectives on the United
States…”
OPIC
• Small, independent U.S. government agency established in 1971
• Supports U.S. foreign direct investment in approximately 145 developing countries
Investor Eligibility
• U.S. citizen• U.S. corporation or other
organization, over 50% U.S. owned• Foreign corporation, over 95% U.S.
owned• Foreign entity other than a
corporation, 100% U.S. owned
General Eligibility Requirements
• Project criteria:
– New projects, expansions, privatizations
– Private investment (limited foreign government participation, private sector management)
General Eligibility Requirement
• Policy criteria– host country – developmental effects– no negative U.S. economic effect– environmentally sound– worker rights, human rights
Finance Program• Limited recourse project financing, up to:
– 50% of project costs for new projects– 75% of costs of expansions– $100k to $250 million per project
• Loan Terms:– amortization 3-15 years– market rates of interest– share collateral with other senior lenders
• Corporate loan
Finance Program Criteria
• Commercial viability• Track record / experience of sponsors• Reasonable leverage• Project completion support• Minimum 25% beneficial U.S. ownership• Balance sheet lending for corporate loan
Sample Total Project Costs
Pre-operating expenses $ 2,000,000
Land 1,000,000
Construction 2,500,000
Equipment 4,000,000
Working capital 1,000,000
Total project costs $ 10,000,000
Sample Financial Sources EquityU.S. Sponsor $ 1,250,000 Non-U.S. Sponsor $ 3,750,000
TOTAL $ 5,000,000 50%
DebtOPIC Loan $ 4,000,000Other Debt $ 1,000,000
TOTAL $ 5,000,000 50%
Total CapitalTotal Capital $10,000,000$10,000,000 100%100%
Insurance Program
• Coverages–Currency Inconvertibility–Expropriation–Political Violence
• Assets Coverage• Business Income Coverage
• Up to 20 year term, rates fixed for life of contract
Insurance Summary
• Inconvertibility Coverage– protects income and returns against
blockage
• Expropriation Coverage– protects net book value of insured
investment
• Political Violence Coverage– protects physical assets and replaces
lost income
Expropriation - Compensation
• Scheduled Payment in Default • Acceleration at OPIC’s option • Limitation - commercial default /
realizable value of security
Political Violence
Scope of Coverage• Violent Act with Political Objective
• Direct and immediate cause of default
• Default continues for 30 days
Compensation• Amount of scheduled payment in default
Created as:1987 Administration Foreign Policy
InitiativeCreated to:
• Complement OPIC’s insurance and loan products
• Address need for private equity in developing countries
• Provide catalyst for private sector development
I - Overview: Goals and Needs
OPIC Private Equity Funds
• OPIC Supports a family of 26 Private Equity funds targeting a variety of regions and sectors
• Fund Managers are selected by a transparent process
• Funds are capitalized by a OPIC guaranteed debt and private equity
OPIC’s Role in Your Investment
OPICInsurance
OPICInsurance
Non-U.S.Banks
Non-U.S.Banks ProjectProject
OPICFinanceOPIC
Finance
LocalSponsorLocal
Sponsor
ProjectCompanyProject
Company
U.S.Banks
U.S.Sponsor
OPIC SupportedInvestment Fund
OPIC SupportedInvestment Fund