Print this pagePrint

Global Technology and Innovation Fund - Supplemental Information

Call for Proposals

 

Question: Will OPIC consider a fund with a global strategy with investments in OPIC-eligible countries outside of the Targeted Regions?

 Answer: OPIC will consider a fund with a global strategy which includes investments in the Targeted Regions, as defined in the Fund Geographic Focus section of the Call for Proposals Overview webpage at http://www.opic.gov/investment-funds/calls-for-proposals/global-technology-innovation-fund/

However, funds with a primary investment focus in the Targeted Regions are of particular interest to OPIC.

Question: In Section E of the Call for Proposals Questionnaire webpage, the applicant is asked to provide information in the form of Annex 1, Tabs A-C. In Tab B of Annex 1, OPIC asks the applicant for “Fund Ownership Stake” and “Equity Holdings”. Could OPIC please provide an explanation regarding the difference between these two sections?

 Answer: The "Fund Ownership Stake" section refers to the equity stake that your private equity fund has, whereas "Equity Holdings" refers to a list of all equity holders in the portfolio company that the fund invested in, to the extent that information is available.

Question: Does OPIC pay management fees and/or carried interest/performance fees to any of the fund managers who manage funds in respect of which OPIC has provided debt finance?

 Answer: The OPIC facility is subject to pro rata management fees and carried interest in accordance with a fund’s partnership documents. However, each fund OPIC supports is different and the terms of OPIC's support are negotiated on a case-by-case basis.

Question: What are some of the key metrics and/or benchmarks currently being used by OPIC to assess the economic impact of a fund?

Answer: Please reference the PDF documents below for a list of metrics which are used by OPIC to assess the economic impact of a fund and its portfolio company investments.

Question: In reference to the “Investment Strategy” portion of the Questionnaire,  please clarify what is meant by “supply/demand imbalance for capital” found in section B.1.b (vii).

Answer: This particular question is asking the applicant to comment on how the proposed fund strategy will complement the supply/demand imbalances (e.g. low capital supply and high capital demand) present in the fund’s targeted geographies and/or sectors.

Question: Is the applicant required to use the format of the Questionnaire or may the applicant utilize its own proposal format ensuring that all points in the questionnaire are included?

Answer: Each proposal must provide all of the information requested in the Questionnaire accompanying the Call. However, information does not have to be presented in the format of the Questionnaire.

Question: In reference to the “Other” portion of the Questionnaire, the fifth question states that “OPIC will require a certification that neither the fund manager nor any of its affiliates has engaged in any “discouraged transaction” with the countries of Iran, North Korea, Sudan, Syria and Cuba”. In what form should the certification be?

Answer: Duly authorized representatives of the fund manager should sign a certificate representing involvement in “discouraged transactions”. This certificate need not be notarized.

Question: Can funds invest a certain percentage of their funds in other, non-OPIC eligible, countries?

Answer: OPIC will work with selected managers to develop a structure that is suitable for the fund managers, limited partners, and OPIC, taking into consideration divergent geographic preferences.

Question: With regard to information contained within the proposal, will OPIC sign a Non Disclosure Agreement (NDA)? 

Answer: OPIC will not sign a NDA or Confidentiality Agreement regarding information included in submissions for this Call for Proposals. However, with the exception of general ideas and concepts contained within any proposal, OPIC maintains strict confidentiality with respect to all business confidential information. 

Question: Regarding Attachment Three in the Call for Proposals, "Provide a three-year operating budget outlining fund expenses”. Is the request for the expenses of the Fund or of the management company?

Answer: Please provide both revenue and expenses. The intent is to understand the sustainability of the private equity team/firm.  Please provide the operating budget for the management company, including other funds that the firm/management company manages.

Question: Is the interest rate determined at the closing of the Fund or on each drawdown of the loan?

Answer: Each drawdown of the loan.

Question: What is the typical market premiums paid to COP holders?

Answer: Depending on market conditions and term of COP, spreads have ranged from 0.84% to 3.74%.

Question: Does the Fund interact with the COP holders or is this through the OPIC office?

Answer: The Fund will engage a placement engagement with the assistance of OPIC to interact with COP holders.

Question: What is the typical capital gain that OPIC expects?

Answer: As noted on the Call’s Overview webpage, a fund estimating to deliver 20% returns to its investors should expect an all in cost of the OPIC product to range between 9.5% and 12%.

Question: Given a fund of $250m, what would the anticipated fees and expenses due to OPIC be? Is it possible to break that down to the component level?

Answer: Please see attached Executive Term Sheet  example.

Question: In the ‘waterfall’ formula in the FAQ, what would a typical debt/equity ratio be?

Answer: 2:1 equity-to-debt ratio.

Question: Given a 10-year fund, is there a limit to the time-frame for follow-on investment post the investment period?

Answer: OPIC is statutorily limited to a drawdown period of approximately 7 years after its Commitment.

Question: Does a fund managed by non-US citizens qualify?

Answer: Per the Call for Proposals FAQ (http://www.opic.gov/investment-funds/calls-for-proposals/global-technology-innovation-fund/faq), “OPIC seeks to support funds that have U.S. participation in either the ownership of the fund manager/general partner, or the equity capital of the fund. Proposals should demonstrate that the fund manager/general partner will be majority beneficially owned by U.S. Persons, or that the fund sponsor will seek to raise equity capital from U.S. Persons equivalent to 25% of OPIC’s expected commitment”.

Question: Under the section on "Fundraising, OPIC Financing and Structure of the Fund", there is a question that asks the applicant to "Describe the proposed financial structure of the fund including OPIC financing and the overall target financial performance of the fund". Please clarify what is meant by the "overall target financial performance".

Answer: Please provide the target financial performance measurements which you believe are most appropriate (e.g. expected IRR, multiple, etc…) for the proposed fund.

Question: In regard to Appendix 1 – Tab A “Gross and Net Cash Flow”. Please clarify the nature of “other expenses” that OPIC would like to have referenced. Are they expense for the Fund’s activities as a whole or just relating to the investments only?

Answer: The Net Cash Flows represent cash flows that the LPs see from the fund.  These are not necessarily tied to investments (e.g., management fee is not tied to individual investments).  Other expenses would be any expenses from the LP perspective that are not reflected elsewhere in the computation of Net Cash Flows for the LP in the spreadsheet.

Question: Please clarify if the Expedited Screening Questionnaire (ESQ) and Sponsor Disclosure Report are required forms for proposal submission.

Answer: Neither the Sponsor Disclosure Report nor the Expedited Screening Questionnaire are required for the Call for Proposals proposal.

Question: In his Cairo speech, President Obama referred to a fund for Muslim majority countries.  We assume that the Global Technology and Innovation Call for Proposals requires the finalists to invest in OPIC-eligible countries regardless of whether or not they are Muslim majority.

Answer: OPIC is seeking private equity fund management teams with investment experience in the Targeted Regions, as defined in the Fund Geographic Focus section of the Call for Proposals Overview webpage at http://www.opic.gov/investment-funds/calls-for-proposals/global-technology-innovation-fund.

Question: The Call for Proposals suggests the fund should have US investors.  Are we correct that the fund only needs 25% of the OPIC funds to be US investors and the rest of the OPIC debt and 100% of the equity can be non- US investors?

Answer: The 25% rule applies to equity capital. Thus, U.S. Persons must constitute 25% of the fund’s expected equity commitments. OPIC debt is provided from U.S. Persons but is not included as part of the 25% of equity capital to be raised.

Question: Is there any minimum amount or percent of US equity investors that are needed to be eligible?

Answer: 25%.

Question: Do a majority of the equity owners of the fund manager need to be US citizens or can the majority include non-US citizens residing in the U.S. with permanent residency?

Answer: Per Call for Proposals FAQ (http://www.opic.gov/investment-funds/calls-for-proposals/global-technology-innovation-fund/faq), “Proposals should demonstrate that the fund manager/general partner will be majority beneficially owned by U.S. Persons, or that the fund sponsor will seek to raise equity capital from U.S. Persons equivalent to 25% of OPIC’s expected commitment”. U.S. Persons" means (a) U.S. citizens, (b) U.S. corporations, partnerships, trusts, and similar entities that are more than 50% beneficially owned by U.S. citizens, or (c) foreign entities wholly owned by U.S. citizens.

Question: In Section B of the Questionnaire, Investment Strategy, is the applicant expected to have obtained opinions from legal counsel or, at this stage of the application process, will only a simpler response based on available information suffice? Furthermore, are we expected to structure the creation of the legal entities if it is meant to be a new fund, or is a concept note sufficient at this stage?

Answer: A simpler response based on available information will suffice at this stage. The selected finalists are expected to structure the creation of appropriate legal entities necessary to efficiently execute their respective investment strategies.

Question: As part of the Questionnaire, you’ve requested that we submit the names and contact details of 20 reference contacts (Section G.1). As such, does OPIC prefer that the applicant notify all 20 contacts as soon as possible that they may be contacted by OPIC or will OPIC let the applicant know in advance that they will be contacting the listed references?

Answer: OPIC will provide the selected finalists with either a written and/or verbal notification that OPIC will be contacting listed references.

Question: Will OPIC extend the proposal submission deadline?

Answer: OPIC will not extend the proposal submission deadline for this Call for Proposals.

Question: It is noted that OPIC welcomes first time funds and new teams to apply for OPIC funding.  The Questionnaire includes various questions or requirements that are not applicable to first time funds and new teams (for example, see item A.2 in the Questionnaire). How would OPIC prefer first time funds and new teams handle these questions or requirements?

Answer: Please provide responses which reflect the most accurate picture of fund manager/general partner experience and track record.

Question: It is noted in the Call for Proposals’ FAQ, that funds should be domiciled in a jurisdiction that OPIC is comfortable will enforce OPIC's agreements with the fund. Please confirm that OPIC is comfortable with the Cayman Islands as the jurisdiction of a fund's domicile.

Answer: Yes. OPIC is comfortable with the Cayman Islands.

Question: With regard to the requirement to provide a list of all affiliated organizations and subsidiaries of the participant (item A.4 in the Questionnaire) - please clarify what the word "affiliated organizations" refers to, or provide a definition of such term.

Answer: Any organizations that are within common control deemed to be 25% or more.

Question: Describe the proposed structure for the fund.

Answer: The structure of each proposed fund is at the discretion of each applicant.

Question: Describe the proposed financial structure of the fund including OPIC financing.

Answer: OPIC typically provides no more than one-third of the capital of a fund, i.e., an amount equal to fifty percent of the equity capital raised for the fund.

Question: What is meant by structure? Is it the number of fund entities used? Their domicile? Their tax treatment?

Answer: Please refer to Section 1 of the Call for Proposals FAQ, “Structure and Form of Participation” located at http://www.opic.gov/investment-funds/calls-for-proposals/global-technology-innovation-fund/faq, for what is meant by structure.