Press Release
Tuesday, August 5, 2008
OPIC BOARD APPROVES $127 MILLION FOR TWO NEW INVESTMENT FUNDS FOR AFRICA
WASHINGTON, D.C. – The Board of Directors of the Overseas Private Investment Corporation (OPIC) approved $127 million for two new private equity investment funds for Africa. The first fund will invest in pan-African companies with exceptional growth prospects, the second is designed to strengthen African capital markets by investing in innovative financial instruments such as mezzanine and convertible debt.
The board first approved up to $60 million in OPIC financing to support ECP Africa Fund III, which will make investments of between $25 million and $100 million in established businesses with exceptional growth prospects throughout Africa. Specifically, it will target companies which have pan-African reach and provide jobs and consumer goods across several countries, and countries that are undertaking economic and political reforms.
With an initial capitalization of $310 million and a target size of $1 billion, the fund will invest in sectors such as telecommunications, financial services, energy, mining, agribusiness, transportation, distribution and logistics.
OPIC selected as fund manager Emerging Capital Partners, which is managing the fund’s successful predecessors, ECP Africa Fund II and ECP Africa Fund I, also supported by OPIC financing.
Next, the board approved up to $67 million in financing to support the Greylock Africa Opportunity Fund I, LP, which will invest in medium-sized businesses throughout Africa, with a focus on sub-Saharan Africa. With a target capitalization of $200 million, it will target sectors such as telecommunications, finance and banking, agribusiness, tourism, real estate, natural resources and energy.
The fund will target the financing gap faced by mid-sized African companies, by providing creative financing opportunities of debt and hybrid debt not currently offered by banks. It will invest in corporate, mezzanine and convertible debt for medium-sized companies, with smaller allocations for a microfinance portfolio and corporate debt for larger enterprises. The fund thereby aims to help to diversify African capital markets, by expanding the pool of investment securities available to both issuers and investors.
OPIC selected as fund manager Greylock Capital Management, headquartered in New York City.
OPIC was established as an agency of the U.S. government in 1971. It helps U.S. businesses invest overseas, fosters economic development in new and emerging markets, complements the private sector in managing risks associated with foreign direct investment, and supports U.S. foreign policy. Because OPIC charges market-based fees for its products, it operates on a self-sustaining basis at no net cost to taxpayers.
OPIC’s political risk insurance and financing help U.S. businesses of all sizes invest in more than 150 emerging markets and developing nations worldwide. Over the agency’s 35-year history, OPIC has supported $177 billion worth of investments that have helped developing countries to generate over $13 billion in host-government revenues and create over 800,000 host-country jobs. OPIC projects have also generated $71 billion in U.S. exports and supported more than 271,000 American jobs.