Download OPIC`s Role in Impact Investment

 U.S. Overseas Private Investment Corporation Scaling the Impact Investing Sector The Impact Investing Opportunity Impact investments aim to produce positive social or environmental impacts in developing countries while at the same time generating financial returns sufficient to make them – and the improvements they bring – sustainable. If successful, they stand to revolutionize sustainable development in emerging markets. OPIC’s Role: Bringing Impact Investing to Scale OPIC, the U.S. Government’s development finance institution, aims is to provide valuable financial solutions to address gaps in nascent impact investing market. OPIC is tailoring its financing and political risk insurance products to the needs of impact investors. In fact, OPIC’s 40‐year history of investing in projects that have both a developmental impact and sustainable financial returns are a sound foundation from which to innovate further and support impact investors and enterprises who set out with the intent to serve both goals. The services OPIC is working to develop for impact investors are: 9 Certificates of participation for portfolio managers seeking to fill impact investing portfolio allocations with fixed‐income instruments. These feature a full faith and credit guaranty of the U.S. Government, positive spreads above the Treasury‐based rate, floating and/or fixed rates; and maturities up to 20 years; 9 Multi‐party and/or multi‐project financing facilities for foundations, private equity funds or social entrepreneurs seeking to collaborate on common impact investing goals, finance expansions, and to take demonstration projects to scale; 9 Supply chain financing for businesses, social entrepreneurs or foundations seeking to provide the supply chains of emerging market companies with working capital or fixed‐asset financing; 9 Partial guaranty of financing facilities to mitigate risk to investors; and 9 Political risk insurance product for emerging markets private equity investment funds that will significantly mitigate the risks posed to investors, thereby increasing their appetite for opportunities in emerging markets, especially in impact investments. OPIC’s Historic Boost for Impact Investing: Six Funds Catalyzing $875 Million In October 2011, OPIC’s Board of Directors approved $285 million in financing for six new investment funds that aim to inject $875 million into the impact investing sector – the largest commitment by the U.S. Government to impact investing in emerging markets to date. Investment Fund for Health in Africa II Will invest in companies that improve the health situation for Africans, targeting small hospitals and clinics & health care products, import, distribution and manufacturing, insurance and supporting industries such as water and sanitation, food and nutrition. OPIC financing: $83 million Target capitalization: $250 million ManoCap Will invest in SMEs in Sierra Leone and Liberia, as well as other West African countries, with a focus agriculture, agro‐processing, sustainable fisheries, services, healthcare, sanitation, construction and building materials, tourism, light manufacturing, and financial services. OPIC financing: $34 million Target capitalization: $100 million Sarona Will invest in private equity funds that target market‐ based returns while investing in SMEs in frontier markets, which are expected to contribute employment, wealth creation, and access to goods and services to underserved populations. OPIC financing: $87.5 million Target capitalization: $250 million Latin Idea
Will provide growth capital to Mexican SMEs within the technology, media, telecommunications and services sectors. OPIC financing: $25 million Target capitalization: $125 million MPOWER Ventures
Will focus on unbanked and the under‐banked populations in emerging markets through the provision of prepaid debit cards, or GPR cards, and related alternative financial services. It will initially focus on Mexico, Brazil, Colombia, Peru and Bolivia. OPIC financing: $15 million Target capitalization: $50 million Terra Bella Will invest in projects that generate carbon credits through the protection and enhancement of forests while simultaneously generating valuable social and environment co‐benefits. OPIC financing: $40 million Target capitalization: $100 million Success stories: Root Capital & Terra Global Capital A recent example of OPIC’s support for impact invest involves Root Capital, a nonprofit organization active in more than 30 countries. OPIC provides financing to Root Capital, which then delivers affordable credit to rural grassroots businesses including cooperatives of farmers. Without Root Capital’s impact investors, this model could not exist, nor could OPIC leverage their investments to reach more groups in different countries. In addition, without willing corporations along the coffee supply chain, such as Green Mountain Coffee and Starbucks, the model would not be sustainable and provide an adequate risk outlook and return for investors. Root Capital demonstrates how a for‐profit lending model embedded in a not‐for‐profit can return capital to investors and build social benefit. In another example, OPIC executed the first political risk insurance contract for a Reduced Emissions from Deforestation and Degradation (REDD) project which will protect 64,318 hectares of forest in Cambodia. OPIC is providing insurance to Terra Global Capital, a U.S land‐use carbon development and investment company working with the Cambodian government to prevent deforestation in Oddar Meanchey province. Carbon credits from the project will be sold by Terra Global Capital in international carbon markets. Revenues from the sale will be used to fund activities that reduce deforestation, including community‐based water resource development projects, strengthening land‐tenure, and sustainable farming systems. The project is also supported by the Danish International Development Agency, the Clinton Climate Initiative and the John D. and Catherine T. MacArthur Foundation.