Global Renewable Resources Funds - Supplemental Information | OPIC: Overseas Private Investment Corporation

Call for Proposals
Overview Questionnaire FAQs Appendix 1 - Tabs 1, 2, 3	Submit a Question/Comment Register a Proposal Supplemental Information

Update: In order to accommodate requests for additional time to respond to the Call, OPIC has determined that supplemental materials received after February 11 by 5:00 P.M. Eastern Standard Time (EST) but on or before February 18 by 5:00 P.M. EST will be considered as part of the proposal. In such a case, please indicate in your initial proposal that you will be providing additional materials.

Question: Would OPIC consider a fund of funds in gaining access to Global Renewable Resources Funds?

Answer: For this Call, OPIC is seeking proposals from managers who will primarily invest directly into companies and projects, as opposed to investments in other funds. It is possible that in connection with future calls, OPIC would consider proposals from managers of fund of funds.

Question: Alternatively, would a separate account customized to meet the investment needs and goals of OPIC be considered?

Answer: Fund managers should be able to raise a pool of capital from private and public institutional investors for the particular fund under consideration. Such investors could include public and corporate pension plans, foundations, endowments, family offices, qualified high net worth individuals, and development financial institutions. OPIC expects the fund managers to also contribute capital to the fund.

Question: Is OPIC accepting RFP's for United States Renewable Energy projects?

Answer: The primary purpose of the Call is to promote the development, investment and implementation of clean energy projects and companies in OPIC-eligible countries. Because OPIC has a developmental mandate, it can only support investments in OPIC-eligible, emerging economies, not in the United States.

Question: What does "Waste Management" consist of? Are municipal/medical/hazardous waste treatment facilities included?

Answer: The Call’s reference to “waste management” includes municipal, hazardous and medical waste management facilities. Please note that such projects, particularly hazardous waste projects, may be classified as Category A Projects requiring additional scrutiny under to OPIC's Environment and Social Policy Standards (ESPS). However, such projects would still be eligible. Please reference OPIC's ESPS for more information.

Question: What does "Other Water Treatment" consist of? Are clean water supply facilities included?

Answer: The Call’s reference to “other water treatment” includes potable water, wastewater and wastewater recycling for irrigation projects. Clean water supply facilities would also be included.

Question: Can you give examples for "Energy Efficiency Products/Systems" and "Emission Treatment/Control"?

Answer: The Call’s references to”energy efficiency products/systems” and “emission treatment/control” include independently verified improvements that either reduce greenhouse gas emissions or energy intensity usage by more than 20%. Applicants must demonstrate the improvements annually via a third party auditor. Examples might include the following: (i) upgrades to heating, ventilation, air conditioning (HVAC), and water systems, (ii) energy efficient building design, (iii) on-site distributed generation using renewable systems, and (iv) process optimization, enhanced controls and other approaches typically identified by ESCOs. Please refer to the US Department of Energy website: http://www.eere.energy.gov/topics/energy_efficiency.html for more information.

Question: Some operating steel/cement companies need capital to replace their old/obsolete equipment with those that are more energy-saving. Does the capital provided to the companies satisfy OPIC requirements?

Answer: The retrofitting of steel and cement facilities with more energy-efficient systems would be eligible. Please note that these types of retrofits must satisfy OPIC’s ESPS Green House Gas (GHG) accounting policy, which requires that such projects demonstrate at least a 20% GHG reduction per annum. Please refer to paragraph 8.7 of the ESPS for more information.

Answer:
1. OPIC will provide financing in the ratio of 1:2 debt: equity, that is, up to 33% of a fund’s total capitalization.
2. Please note that OPIC’s capital under this Call for Proposals is provided at the fund level. While OPIC is generally senior to other debt at the fund level, OPIC would need to better understand the specific nature and terms of such third party debt before coming to a conclusion. If a fund has or is considering other debt financing besides that of OPIC, the proposal should provide a description of other debt financing.

Question: The loan will be non-recourse to the Fund LPs and sponsors. Who do you refer to as the Sponsors?

Answer: The sponsors of a fund are generally the entity (ies) and/or individual(s) that own the investment manager of the fund.

Regarding the sponsors of (as well as potential investors in) a fund, please note that OPIC requires a certain amount of U.S. participation. Please see the following link under Frequently Asked Questions (FAQs) describing how a fund would qualify. (http://www.opic.gov/investment-funds/calls-for-proposals/global-renewable-resources-funds/faq#4)

Question: We need to understand the fund structure that suits OPIC. Would OPIC be OK if we design a standard fund investment vehicle and, eventually, change the vehicle during at a later date to a different one if applicable?

Answer: OPIC is not in a position to determine a fund’s structure; a fund’s proposed structure would be expected to be part of a submission to this Call for Proposals. OPIC welcomes proposals with structures that match a fund's particular investment strategy and that meet the Call's Investment Criteria.

Question: I would like to clarify if funds focused on plantation forestry (eucalyptus) with the objective of producing biomass in the form of charcoal for energy purposes would be eligible to participate in your Global Renewable Resources Funds program.

Answer: Yes, funds focused on this investment opportunity would be eligible as long as the land is already in some form of cultivation. Please note that any forestry project would require third-party certification.

Question: Would OPIC consider a fund of funds in gaining access to Global Renewable Resources Funds?

Question: Alternatively, would a separate account customized to meet the investment needs and goals of OPIC be considered?

Question: Is OPIC accepting RFP's for United States Renewable Energy projects?

Question: What does "Waste Management" consist of? Are municipal/medical/hazardous waste treatment facilities included?

Question: What does "Other Water Treatment" consist of? Are clean water supply facilities included?

Question: Can you give examples for "Energy Efficiency Products/Systems" and "Emission Treatment/Control"?

Question: Please explain the fund sources structure. OPIC will provide, in a form of a senior debt, a sum equal to 50% of the fund's equity, meaning a same amount will be recruited from other LPs, in a form of equity, and the rest through debt.
1. Is this correct?
2. If so, what are the priorities between Opic's debt and the third party's debt?

Answer:
1. OPIC will provide financing in the ratio of 1:2 debt: equity, that is, up to 33% of a fund’s total capitalization.
2. Please note that OPIC’s capital under this Call for Proposals is provided at the fund level. While OPIC is generally senior to other debt at the fund level, OPIC would need to better understand the specific nature and terms of such third party debt before coming to a conclusion. If a fund has or is considering other debt financing besides that of OPIC, the proposal should provide a description of other debt financing.

Question: The loan will be non-recourse to the Fund LPs and sponsors. Who do you refer to as the Sponsors?

Answer: The sponsors of a fund are generally the entity (ies) and/or individual(s) that own the investment manager of the fund.

Question: I am wondering if you give any special consideration in the process to funds which are managed by women. Will you consider first-time funds?

Answer: While submissions from women-managed funds are welcomed, they will not be granted preferential consideration in the selection process for this call for proposals.

Yes, OPIC will consider first-time funds if the fund manager and its team can present a prior identifiable, positive track record as investors in the sector(s) of their expertise, and which is consistent with the proposed fund’s investment strategy. The submission will be evaluated like any other submission per the stated selection criteria

Question: We have a single-investment fund where a holding company focused on building a large portfolio of renewable power units is the only portfolio company operating in this fund. Can we apply for OPIC support?

Answer: OPIC would review such a submission and not exclude it from consideration if it met the stated investment selection criteria. OPIC generally commits to blind pools of capital, typically structured as limited partnerships that would be expected to have diversification limits in companies, geographies and/or sectors as part of its investment strategy.

Question: Is China an eligible or qualifying country?

Answer: China is not an OPIC-eligible country.

Question: We wanted to confirm if the fund manager would meet the definition of controlled by US persons if the majority of the team is made up of US citizens but control slightly less than a majority of the fund manager.

Answer: Please note that the ownership of the IM is only one element of our analysis. OPIC would also look to the identity of the fund's LPs, and the US nexus could also be satisfied if the IM raises at least 25% of OPIC’s commitment (not 25% of the fund’s total capital) from US institutional investors.

Question: We would like to understand the extent of the nonrecourse debt. Is the collateral only the sponsor and LP's participation in the Fund; or is the sponsor/LP liable for the whole debt? We need to understand the balance sheet implications to our manager.

Answer: While each transaction is negotiated individually, OPIC does not as a matter of course structure any loan with recourse to the sponsors or to the limited partners. Repayment of the OPIC debt is a general obligation of the fund vehicle itself, which is generally formed as an entity with limited liability. In the recent past and, we expect, going forward, OPIC collateral has been limited to a pledge of the fund's interest in the portfolio companies acquired with OPIC support.

Question: Does the Advisory Board or the Investment team receive more weight in your evaluation of the Proposal?

Answer: OPIC will assess the quality and composition of both the Advisory Board and the fund’s investment team. OPIC will assess a number of factors as regards the investment team, including its track record, experience in strategy execution, cohesion and transaction attribution.

Question: Can you elaborate on "supply/demand imbalance for capital mitigated by the Fund strategy"?

Answer: Please describe how your fund’s investment strategy will supply capital to address unmet demand for capital in a particular region, sector or industry.

Question: Is there any objection in investing in renewable energy in Kazakhstan or Nigeria?

Answer: No, both are OPIC-eligible countries.

Question: When a fund manager submits a proposal, are they entering into a binding legal contract to participate with the due diligence process and accept an investment from OPIC should they be selected?

Answer: Since fund managers may withdraw from consideration at any point during the selection process, the submission of a proposal does not legally obligate the fund managers to proceed through due diligence or accept an investment from OPIC.

Question: Please confirm the question relates to metrics/benchmarks in assessing performance in reducing GHG and more sustainable use of natural resources as opposed to financial metrics such as IRR calculation.

Answer: Correct. The answer to this question should address metrics/benchmarks as relates to the fund’s economic development strategy rather than financial metrics. One such metric would be the reduction of GHG.

Question: In question D1d please define "key Stakeholder" and clarify what concern OPIC is looking to address with the question.

Answer: Key stakeholders refer to any groups external to the fund (government, corporate, etc) with whom the manager may regularly interact while sourcing, managing or exiting investments.

Question: When will bidders know whether they have been short-listed or they have been unsuccessful?

Answer: Managers should expect to be informed as to whether they have been short-listed prior to the week when short-listed managers will be asked to present to OPIC’s Evaluation Committee in mid-March.

Question: I am writing to request an extension in the deadline for the submission of proposal against the call issued by OPIC for Renewables Fund. We are diligently working to put togther a proposal for OPIC's review assuming that the current deadline will hold, however, if an extension is granted, it would certainly help improve the quality of response from our side. I am hopeful that you will consider this request in the context described above.

Answer: In order to accommodate requests for additional time to respond to the Call, OPIC has determined that supplemental materials received after February 11 by 5:00 P.M. Eastern Standard Time (EST) but on or before February 18 by 5:00 P.M. EST will be considered as part of the proposal. In that case, please indicate in your initial proposal that you will be providing additional materials.

Question: CFP states all submissions need to be received by OPIC / Cambridge by 5:00 P.M. Pacific Standard Time, February 11, 2011. What is the position if electronic submissions are made before cut off, but couriered copies of proposals are delayed due to external factors?

Answer: Please see answer above. (Note – submissions are due Eastern Standard Time, not Pacific Standard Time.)

Question: What do you mean with employees in operational experience (section D, question 1c)? Do you mean internships or employees working as officers in invested companies?

Answer: Employees in operational experience means those focused on portfolio company operations whether based at the fund or seconded to investee companies.

Question: What do you mean with a "complete due diligence report" (attachment 5)?
Is it the Investment Memo that we use to discuss and approve investments with our commission or a due diligence report from a contract company, e.g., an auditing firm, that is usually done right before a final closing?

Answer: A complete due diligence report would include any documentation that the fund produces to assess potential investments, including investment memos, committee reports, and any external analysis produced by contract companies.

Question: Do Native American Tribal Renewable Energy Generation Projects that are sited exclusively on tribal lands qualify as eligible to apply for OPIC Global Renewable Resource Funds?

Answer: Native American tribal lands are not considered OPIC-eligible countries. Please go to the following link for a list of OPIC-eligible countries (http://www.opic.gov/doing-business/where-we-work).

Question: What is the typical ratio between the Current Interest vs. Base Interest, and what are the typical/recent rates?

Answer: While subject to the specific terms of the finance agreement, the outstanding principal of the OPIC Loan and unpaid accrued and compounded interest will bear Base Interest at a rate, determined separately for each disbursement, based on the yield to maturity rate for US Treasury STRIPS of a comparable maturity plus a premium over U.S. Treasury STRIPs that COP holders require, which is based on market conditions at each disbursement. (As an example, the ten most recent investment fund disbursements have had average tenors of 3.34 years, an average premium of 0.51%, and an all-in average Base Interest rate of 1.771%). Annual Current Interest is calculated on the annual loan balance, and has typically been one hundred and fifty basis points. Current Interest will be payable to OPIC by the Fund semi-annually in arrears.

Question: Given (i) OPIC's commitment/loan is up to 50% of the equity amount (i.e., up to 1/3 of the fund size), and (ii) the fund sponsor must raise equity totaling at least 25% of OPIC’s anticipated commitment/loan from U.S. Persons, does that mean equity capital from U.S. Persons shall be at least 1/12 of the fund size?

Answer: Yes, your illustrative example is correct.

Question: Does OPIC for the purposes of this call for renewable resources consider investments in aquaculture and fisheries as eligible?

Answer: Yes, investments in aquaculture and fisheries are eligible.

Question: Please explain the rationale for why “investment strategies that focus on carbon as the primary source of revenue” will not be considered, particularly in cases where projects generate community-based income and livelihoods improvement but only have one commercial revenue stream, carbon.

Answer: OPIC’s principal purpose in issuing the Call is to support the development of new projects in the renewable resources space. Funds that focus solely or primarily on carbon and environmental credits may provide useful and beneficial services, but they are not the target of this Call for Proposals.

Question: Please clarify what type of allowable investment you expect can be used to meet the goals of sustainable forestry, natural resource preservation and forest rehabilitation without allowing carbon as a primary source of revenue for investments?

Answer: Sustainable forestry projects may include those that have a positive impact on rural livelihoods, biodiversity/wildlife, and are able to provide sustainable utilization of products like energy, potable water and food.

Question: What percent of total revenue from carbon would be considered a “primary source”?

Answer: Greater than 50%.

Question: The sentence under the Fund Capitalization section of the call says “OPIC can provide a loan guarantee between $35 million and $150 million per fund” but the FAQ #1 “How does OPIC invest?” states that support is provided in the form of loans. Can you please clarify, whether the selected funds receive actual capital in the form of debt or only a guarantee on loans sourced by the fund?

Answer: The OPIC Facility will be provided to a fund in the form of loans advanced by OPIC, in which certificates of participation (COP’s) guaranteed by OPIC are sold, pursuant to agreements satisfactory to OPIC. OPIC guaranties of COPs will be backed by the full faith and credit of the United States.

Question: Is $35m loan a hard minimum, implying minimum fund size of $100m given a 33% capitalization share ceiling?

Answer: Yes, your illustrative example is correct.

Question: Please confirm that if the general partner of a Luxembourg SIF SICAV SCA fund is a Luxembourg entity, but that the Investment manager is a U.S. entity, that this would meet the U.S. eligibility requirement.

Answer: Yes, it would.

Question: What is the expected timing of the first capital commitment from OPIC for the funds selected?

Answer: For funds that are selected as part of the call process there is no set schedule for the signing of a commitment letter. While subject to the specific terms of the finance agreement, disbursements of the OPIC Facility may be drawn from time to time commencing on the date on which all conditions precedent to the first such disbursement are fulfilled. Fund managers may issue a distribution request that includes the amount, purpose, and timing of the distribution once these aforementioned conditions are met.

Question: Please guide on “reasonable time” within which the fund manager is expected to raise sufficient capital?

Answer: While subject to the specific negotiated terms, a fund manager is generally expected to have an initial close not later than twelve months after the date of the executed Commitment Letter.

Question: What is the expected drawdown window for the funds?

Answer: While subject to the specific terms and conditions set forth in the terms of the finance agreement, the last disbursement is generally expected to take place by the sixth anniversary of the Initial Closing Date.

Question: Are bamboo and rubber trees qualified as forestry for the OPIC Call?

Answer: Yes, plantation cultivation of bamboo and rubber trees for renewable fuel would be considered.