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The Economics |
OPIC collects commercially-based fees and a disproportionately smaller share of profits in consideration for its participation in private equity funds. The OPIC fees consist of a one-time facility fee, and two semi-annually oriented fees (known as “Fixed OPIC Payments”): one applied against the undrawn portion of OPIC capital and the other applied against the drawn and outstanding portion of OPIC capital. The profit component represents a small percentage of proceeds after the return of both OPIC capital and equity contributions.
During the early years of the private equity fund’s term, the OPIC waterfall structure allows for a pro-rata distribution of proceeds to OPIC and the limited partners after fund related expenses (including the Fixed OPIC Payments) have been paid in full, and provided the private equity fund performs above a negotiated and pre-defined loan to value threshold. During the latter years and to the extent the OPIC capital remains outstanding, subsequent distributions will be applied against the remaining OPIC balance with the surplus proceeds to be distributed to the limited partners.
Key Requirements:
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OPIC will generally not contribute more than 33 percent of a private equity funds capital base.
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OPIC requires either that the fund manager or general partner be majority-owned by U.S. persons, or a percentage of the limited partner capital (typically, an amount equal to 25% of the OPIC financing) be provided by U.S. investors.
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All OPIC financed investments must comply with OPIC’s policy requirements related to environment, worker rights, human rights, and US economic impacts.
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