OPIC‘s Project 158 drives private equity capital to emerging markets
In late 2011, OPIC issued its first Global Engagement Call for proposals from qualified emerging markets private equity fund managers. Similar to earlier requests, the Global Engagement Call again focused on driving private, patient, long-term growth capital to OPIC-eligible emerging markets via investment funds. But it was unique from earlier calls for proposals in that the range of investment strategies and structures under consideration were expanded. When the call for proposals closed in January of 2012, OPIC had received a record-setting 158 proposals.
With the global financial crisis in 2008-2009, the emerging market private equity saw a drastic, across-the-board reduction of capital moving into the emerging market segment at large. With so much uncertainty in the market, investors were only considering lower-risk investments. Four years later, emerging market private equity is still struggling to recover. According to The Emerging Markets Private Equity Association, fundraising last year totaled $40.3 billion, a modest 5 percent increase over 2011. However there is good news for the market. As recent as February of 2013, both The Deal and The Financial Times reported that “emerging markets continue their strong allure for private equity.”
Project 158’s proposals direct investment capital to regions where little private capital is flowing. These regions also happen to be some of the world’s poorest, as measured by per capita GDP. Over the medium and long-term, these investments today will likely unlock future investment opportunities that attract more private capital that will fuel sustained social and economic development. In September of 2012, OPIC approved $360 million in financing for three investment funds targeting populations in Africa, Indonesia and Russia –all fast-growing markets with considerable return potential.
OPIC has already approved approximately $960 million to funds as a result of the Global Engagement Call. For more information about Project 158 and a snapshot of private equity in emerging markets, please visit our slideshow here.