Introduction to OPIC American Chamber of Commerce Ho Chi Minh City - PowerPoint PPT Presentation

Introduction to OPIC American Chamber of Commerce Ho Chi Minh City September 18, 2018 The U.S. Government’s Development Finance Institution

Our Organization As the U.S. Government’s development finance institution, OPIC mobilizes U.S. private capital to help address critical development challenges and in doing so, advances U.S. foreign policy and national security priorities. OPIC currently manages a $23 billion portfolio of projects in more than 90 countries and operates on a self-sustaining basis at no net cost to the American taxpayer. The U.S. Government’s Development Finance Institution

Our Solutions OPIC offers innovative financial solutions to support private investors including debt financing, insurance, and support for private equity investment funds. Products Current* Portfolio Debt Finance Based on a $29B Statutory Capacity ― Long-term project or corporate finance for private $23.2 BILLION sector, commercial projects $18 ― Loan amounts up to $350M per project $16 ― Specific programs for providing finance to small-and- Investment $2.9 medium-sized enterprises Funds $14 Political Risk Political Risk Insurance $ 4.1 $12 Insurance ― Protection against currency inconvertibility, $10 expropriation and political violence, including terrorism and other specialized coverage (eg. BOC) $8 ― Policy coverage up to $350M per project, up to 20 year term Debt $6 $ 16.3 ― Fixed premium, cancellable only by insured Finance $4 Investment Funds $2 ― Senior debt for private equity funds selected by competitive process $- ― Investment decisions made independently by Total Exposure selected fund managers ― Provide up to $250M with bullet repayment, zero coupon structure *September 30, 2017 The U.S. Government’s Development Finance Institution

Our Impact Clients that OPIC currently supports are producing significant sustainable economic development results * across a number of sectors . • Housing projects have constructed affordable homes • Agriculture projects are sustaining livelihoods for for over 60,000 homeowners and have provided nearly one million small holder farmers . more than 200,000 home mortgages , the majority of which are first-time homeowners. • Energy projects are expected to generate more than 3.5 gigawatts of electricity in the • Water infrastructure projects are producing over 150 developing world – the equivalent of the power billion liters of water each year, the equivalent of demand of roughly three million U.S. homes . more than 260 billion bottles. • Healthcare projects are treating patients at a • SME and microfinance clients are providing access to rate of more than seven million patient visits per finance to over 10 million SME and microfinance year – in both small clinics and large hospitals. borrowers. • Education projects are educating more than • Renewable energy projects in solar, wind, 120,000 students in primary and secondary geothermal, and biomass will avoid over five million schools, and more than 25,000 students in tons of CO2 annually as an alternative to fossil fuels higher education. *September 30, 2015 The U.S. Government’s Development Finance Institution

Our Clients and Partners OPIC coordinates with other U.S. government agencies and international partners to provide financing and risk mitigation products to a wide range of clients. Current Clients Strategic Partnerships Small/Medium Businesses and Multinationals Departments of State, Commerce, • and Treasury U.S. USAID & USTDA • Government Millennium Challenge Corporation • Ex-Im Bank and SBA • Other DFIs (CDC, FMO, DEG) Development • IFC and MIGA • Nonprofits and Impact Investors Finance Regional Development Banks (IDB, • Institutions ADB, AfDB, EBRD) U.S. Chambers of Commerce • Other AmChams • Partners NGOs • Financial Institutions • The U.S. Government’s Development Finance Institution

Our Policy Standards Investors and project proposals must satisfy certain policy criteria to receive OPIC financing and insurance. Eligibility Criteria for Investors Policy Standards for Projects OPIC supported projects must: To be eligible for OPIC financing and insurance, applicants must:  Contribute to sustainable development  Have a commercially viable business plan  Be located in one of our approximately and successful track record 160 eligible countries  Involve the U.S. private sector in a  Comply with international best meaningful way in the project seeking practices regarding environmental and OPIC support social impact  Maintain private sector control  Support internationally recognized (<50% government ownership) worker rights  Cause no loss of U.S. jobs  Confirm that commercially viable private or adverse impact on the sector financing or insurance is not already U.S. economy available for the project The U.S. Government’s Development Finance Institution

U.S. Connections Policy OPIC policy requires that finance and direct insurance projects have a meaningful connection to the U.S. private sector. How Does OPIC Define U.S.? How Does OPIC Measure the Duration of U.S. Involvement? • A U.S.-organized entity generally must be at least 25% U.S.-owned. • For an ongoing project, U.S. entities need to retain a • A foreign organized entity generally must be at 25% interest in the project through final disbursement least majority U.S.-owned. of the OPIC loan. In the case of a start-up or ‘greenfield’ project, the U.S. entities need to retain a 25% interest through physical completion of the How Does OPIC Measure U.S. Involvement? project. • OPIC requires U.S. involvement in the project • OPIC must approve any proposed transferee of the company in an amount that is equivalent to 25% interest. of the project company’s equity, which may be met with equity, long-term debt or other U.S. How Does OPIC Define U.S. Small Business? contracts or, by combining these types of • This is defined as a business with annual revenues involvement. during the last fiscal year of less than $400M; • OPIC will support investment funds if the fund has entities/individuals without revenues, net worth of raised U.S. equity equal to 25% of OPIC’s loan less than $100M. support or if the fund is managed by a U.S. • Consistent with the U.S. Small Business manager. Administration, OPIC also considers a business with 500 or fewer employees as “small.” The U.S. Government’s Development Finance Institution

When Does OPIC Get Involved OPIC brings investment capital – through financing, political risk insurance and private equity solutions – once private sector investors have determined a project is commercially viable . Themes of Involvement Implementation  Fill in gaps where the private - Investor interest sector is unable to meet the needs - Private sector + of a project in order to make it OPIC / DFI financing sustainable Identification of  Support only viable projects and Opportunities thus not only provide the intended - Program design, feasibility benefits to the host country but studies also ensure repayments to OPIC - USTDA, other grants  Work with host country Host Country Government Initiative to government to confirm alignment Attract Private Sector Investment of interests and development - Defining needs, strategy, resource objectives requirements - World Bank, USAID assistance The U.S. Government’s Development Finance Institution

OPIC Project Lifecycle SOURCING Clients and Partners; Interagency; Business Development PRESCREENING Statutory and Policy Eligibility; Additionality; Development Impact; Financial Viability APPLICATION Business plan; Eligibility of investor/project; Creditworthiness; Developmental Return; Investor/Management Experience/Track Record Credit and Risk Underwriting; Policy Review; Legal Review; DUE DILIGENCE & Character Risk Due Diligence (CRDD) POLICY REVIEW APPROVAL Vice President; Credit Committee/Evaluation Committee; Investment Committee and President & CEO; Board of Directors Finish CRDD, Legal and Policy Review; Negotiation and Execution PROJECT CLOSE of Commitment and Insurance/Financing Agreements; First Closing on Equity Raising (Funds); First Disbursement Ongoing monitoring of financial health, policy compliance, PORTFOLIO MANAGEMENT and development impact; Loan Repayment; Restructuring or Write-Off; Insurance Modifications and Claims; The U.S. Government’s Development Finance Institution

Asia Pacific Office OPIC’s regional office reflects a renewed focus on the region. • Current exposure: Asia comprises 17% of total • Opened in July 2014: When the office OPIC exposure; approximately $1 billion is in was opened it was one of only two Southeast Asia outside Washington. • Infrastructure , energy, manufacturing, and • Regional focus: The OPIC office covers microfinance and small business lending all emerging markets in Asia Pacific projects comprise much of this investment. across all sectors. • Vietnam: • USACEP: The U.S. Asia Pacific • OPIC is currently supporting Australis Comprehensive Energy Partnership Aquaculture and its sustainable barramundi focused on clean and renewable energy, farming business natural gas, markets and • OPIC is actively seeking to do more; sectors interconnectivity, and sustainable currently under consideration include development. energy, power, and education The U.S. Government’s Development Finance Institution