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Doing Business With OPIC

Doing Business With OPIC

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Doing Business With OPIC. OPIC’s Mission Statement - PowerPoint PPT Presentation

Text of Doing Business With OPIC

  • Doing Business With OPIC

  • OPICs Mission StatementTo 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

  • OPICSmall, independent U.S. government agency established in 1971Supports U.S. foreign direct investment in approximately 145 developing countries

  • OPIC Products

    Finance

    Political Risk InsuranceInvestment Funds

  • Investor EligibilityU.S. citizenU.S. corporation or other organization, over 50% U.S. ownedForeign corporation, over 95% U.S. ownedForeign entity other than a corporation, 100% U.S. owned

  • General Eligibility RequirementsProject criteria:

    New projects, expansions, privatizations

    Private investment (limited foreign government participation, private sector management)

  • General Eligibility RequirementPolicy criteriahost country developmental effectsno negative U.S. economic effectenvironmentally soundworker rights, human rights

  • OPIC Finance

  • OPIC FinanceWill Provide Senior Debtfor Your Project

  • Finance ProgramLimited recourse project financing, up to:50% of project costs for new projects75% of costs of expansions$100k to $250 million per projectLoan Terms:amortization 3-15 yearsmarket rates of interestshare collateral with other senior lendersCorporate loan

  • Finance Program CriteriaCommercial viabilityTrack record / experience of sponsorsReasonable leverageProject completion supportMinimum 25% beneficial U.S. ownershipBalance 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 $ 3,750,000TOTAL $ 5,000,000 50%

    DebtOPIC Loan $ 4,000,000Other Debt $ 1,000,000TOTAL$ 5,000,000 50%

    Total Capital$10,000,000 100%

  • OPIC Insurance

  • Insurance ProgramCoveragesCurrency InconvertibilityExpropriationPolitical ViolenceAssets CoverageBusiness Income CoverageUp to 20 year term, rates fixed for life of contract

  • Insurance SummaryInconvertibility Coverageprotects income and returns against blockageExpropriation Coverageprotects net book value of insured investmentPolitical Violence Coverageprotects physical assets and replaces lost income

  • Expropriation - CompensationScheduled Payment in Default Acceleration at OPICs option Limitation - commercial default / realizable value of security

  • Political ViolenceScope of CoverageViolent Act with Political ObjectiveDirect and immediate cause of default Default continues for 30 days CompensationAmount of scheduled payment in default

  • Investment Funds

  • Created as:1987 Administration Foreign Policy InitiativeCreated to:Complement OPICs insurance and loan productsAddress need for private equity in developing countriesProvide catalyst for private sector developmentI - Overview: Goals and Needs

  • OPIC Private Equity FundsOPIC Supports a family of 26 Private Equity funds targeting a variety of regions and sectorsFund Managers are selected by a transparent process Funds are capitalized by a OPIC guaranteed debt and private equity

  • OPICs Role in Your InvestmentOPICInsuranceNon-U.S.BanksProjectOPICFinanceLocalSponsorProjectCompanyU.S.BanksU.S.SponsorOPIC SupportedInvestment Fund

  • Contact OPIC to discuss your project: WWW.OPIC.GOV or call (202) 336-8400

    Here is an example of Project costing $100 million. Equity should consist primarily of cash, but can also include property, plant, and equipment, valued at cost or market, whichever is lower. Of the equity, a U.S. citizen or U.S. corporation must contribute 25% of the 40% (or $10 million, in this example)

    Debt consists of $50 million or 50% of Total Project Costs and Other Debt is $10 million What is OPICs role in Your Investment?

    In a Investment Project there is a* Project, operated by a

    **Project Company

    Investors: **U.S. Sponsor and **Local Sponsor

    Financing:*** OPIC Finance (often the only lender for small projects)For Larger Project there may be **U.S. Banks and**Non-U.S. Banks

    ***** OPIC Insurance is available for U.S. Sponsors and U.S. Financial Institutions lending to the Project