Funds Description

OPIC mobilizes risk capital for emerging markets by providing, through guaranties, long-term debt capital to private equity funds. OPIC’s involvement often serves to encourage institutional investors who may not routinely invest in emerging markets to participate in such funds. OPIC’s support, in addition to the equity raised by fund managers from private sector institutions, is directly invested in private companies in emerging markets. OPIC provides in most instances approximately one-third of the fund’s total capital. The debt is structured similar to that of a zero coupon bond: most of the interest expense is capitalized until the fund liquidates its investments, with the tenor often in parallel to the fund’s life, and repayment occurring in the later stages of a fund’s life.

In addition to mobilizing capital, OPIC Investment Funds also support economic development by mobilizing expertise. OPIC-supported fund managers provide knowledge and experience to the companies in which they invest. These fund managers guide the strategic direction of portfolio companies, participate actively on company boards, and help companies recruit experienced operational managers. The result is enhanced productivity, reliable financial controls, improved corporate governance, modern business practices, and improved worker health and safety conditions. Fund managers also serve as active advocates for the improvement of the local legal and regulatory environment, protection of private property and shareholder rights, and the expansion of robust capital and financial markets.

No element of an OPIC Investment Fund is more important than identifying fully qualified and successful fund managers. To accomplish this, OPIC utilizes an open, competitive process in selecting fund managers initiated periodically through the publication of a “call for proposals” in private equity trade journals and on OPIC’s Web site. Teaming with a prominent private equity advisory consultant, which is also selected through a competitive process, a selection committee established within OPIC conducts extensive manager evaluations and due diligence prior to recommending any proposal to OPIC’s Board of Directors. Any fund manager meeting the selection criteria published in the call will be considered, but only the managers that best fulfill such criteria are selected.

To ensure that OPIC’s Investment Funds portfolio operates on a self-sustaining basis, reflects current policy priorities, and addresses the dynamics of the private equity market, OPIC utilizes asset allocation planning to coordinate its response to policy initiatives and market needs while maintaining a diversified portfolio of funds. In addition, OPIC actively monitors and conducts periodic reviews of the funds it supports as well as their portfolio company investments to ensure compliance with OPIC’s Investment Policy requirements with respect to environmental guidelines, human and workers’ rights, and to ensure that projects supported by OPIC do not have a negative impact on the U.S. economy.