We sat down recently with the very busy Jay Koh, OPIC’s Head of Investment Funds and Chief Investment Strategist, to hear more about how investment funds support critical development challenges. Jay is preparing to be a featured speaker this month at the IFC and Emerging Markets Private Equity Association’s 14thAnnual Global Private Equity Conference. He also just wrapped up OPIC’s most recent call for proposals, which was a good topic to kick off the conversation.
You’ve just wrapped up a global call for proposals. How did that go?
It was highly successful. We had 158 proposals come in from all around the world, a record number of responses for the Agency. This is a great outcome especially given that this was OPIC’s first ever global engagement call, where we opened the call to applications from all countries in which we operate, all sectors, and from a range of asset classes including growth equity, private equity, mezzanine expansion capital and fund of funds. We have had great success with our history of specialized calls targeted at sectors or regions. But this time we decided to go broad, both to provide an opportunity for OPIC to work with a greater number of partners and to address specific priorities within our portfolio. The response to the call really gave us a unique snapshot of the emerging market trends around the world. Right now we are combing through all of these proposals and doing a rigorous evaluation before bringing them before OPIC’s investment committee, and then our Board of Directors for approval. We look forward to sharing even more information about this call in the coming weeks and months, so stay tuned.
You will play a big role at the upcoming Global Private Equity Conference. What trends in emerging market investing do you think will be discussed?
This is really the premiere event for our industry, and OPIC has been a strong supporter of the conference since it began. We are proud to continue to play a key role in developing the discussion about investing in emerging markets. I think one of the hottest topics at this year’s event will be mezzanine financing, which is a combination of debt and equity financing used to expand existing organizations. It exists in the U.S. and Europe, but there will be discussion around the need for mezzanine to be more fully established in some of the emerging markets. Around this year’s conference, OPIC will be hosting two of its own events. On May 14, we will convene a summit for our own general partners, where we will discuss how we can streamline our processes and be an even better partner to them as well as an open workshop on working with OPIC. On May 15, we will be hosting a reception for partners and potential partners. I know it will be a really productive conference, as it is every year.
In which emerging markets are you seeing the most growth and opportunity?
At OPIC, we certainly have priority regions that we focus on, but we are globally engaged. We are increasingly seeing private investors looking at investment and development opportunities beyond the BRIC (Brazil, Russia, India and China) countries. In particular, OPIC has been supporting funds recently in the Middle East and North Africa. Countries like Indonesia and Nigeria are now seeing a lot of robust growth and related private equity interest. And we are continuing to see a lot of opportunity for private equity in sub-Saharan Africa.
What are some of the biggest development challenges in these regions and how do investment funds help to address these?
One of the biggest challenges in emerging economies is addressing issues around environment, social and governance (“ESG”) standards and labor and human rights. OPIC has worked to good partner for private equity in emerging markets by in helping them to adopt best practices for active investment in emerging markets, including ESG standards. This has led to the development of higher value funds and created a more sophisticated investor class.
Do you think investors as a whole are becoming more socially minded, and starting to be more interested investing in projects that address an important social need, rather than just ensuring a positive financial return?
It is now well-recognized that best practices includes being a good citizen when you invest. Environmental, social and governance (ESG) criteria are really a part of all of investing we do in these countries. It is possible now for investors to do well financially, by doing good around the world.
If you have any questions for Jay, be sure to leave them in the comment section of this blog.
