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Doing Business With OPIC
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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
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OPICSmall, independent U.S. government agency established in
1971Supports U.S. foreign direct investment in approximately 145
developing countries
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OPIC Products
Finance
Political Risk InsuranceInvestment Funds
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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
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General Eligibility RequirementsProject criteria:
New projects, expansions, privatizations
Private investment (limited foreign government participation,
private sector management)
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General Eligibility RequirementPolicy criteriahost country
developmental effectsno negative U.S. economic
effectenvironmentally soundworker rights, human rights
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OPIC Finance
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OPIC FinanceWill Provide Senior Debtfor Your Project
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Finance ProgramLimited recourse project financing, up to:50% of
project costs for new projects75% of costs of expansions$100k to
$250 million per projectLoan Terms:amortization 3-15 yearsmarket
rates of interestshare collateral with other senior
lendersCorporate loan
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Finance Program CriteriaCommercial viabilityTrack record /
experience of sponsorsReasonable leverageProject completion
supportMinimum 25% beneficial U.S. ownershipBalance sheet lending
for corporate loan
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Sample Total Project Costs Pre-operating expenses$ 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
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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%
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OPIC Insurance
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Insurance ProgramCoveragesCurrency
InconvertibilityExpropriationPolitical ViolenceAssets
CoverageBusiness Income CoverageUp to 20 year term, rates fixed for
life of contract
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Insurance SummaryInconvertibility Coverageprotects income and
returns against blockageExpropriation Coverageprotects net book
value of insured investmentPolitical Violence Coverageprotects
physical assets and replaces lost income
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Expropriation - CompensationScheduled Payment in Default
Acceleration at OPICs option Limitation - commercial default /
realizable value of security
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Political ViolenceScope of CoverageViolent Act with Political
ObjectiveDirect and immediate cause of default Default continues
for 30 days CompensationAmount of scheduled payment in default
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Investment Funds
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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
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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
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OPICs Role in Your
InvestmentOPICInsuranceNon-U.S.BanksProjectOPICFinanceLocalSponsorProjectCompanyU.S.BanksU.S.SponsorOPIC
SupportedInvestment Fund
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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
