Press Release
Thursday, February 14, 2008
PRESIDENT BUSH ANNOUNCES FIVE OPIC FUNDS FOR AFRICA TOTALING $875 MILLION IN NEW INVESTMENT SUPPORT
Complements Financial Commitments Made in 2007
WASHINGTON, D.C. – President George W. Bush announced today that the Overseas Private Investment Corporation (OPIC) would support five new private equity investment funds, with a combined target capitalization of $875 million, designed to invest in a variety of sectors vital to Africa’s economic development, including health care, housing, telecommunications and small and medium-sized enterprises (SMEs). The new commitments represent the largest single-day announcement in the history of the agency’s investment funds program.
“Last year, we launched the Africa Financial Sector Initiative. As part of this effort, OPIC mobilized $750 million in investment capital for African businesses,” President Bush said in a speech on the eve of his February 15-21 trip to Benin, Tanzania, Rwanda, Ghana, and Liberia. “Today, I'm announcing that OPIC will support five new investment funds that will mobilize an additional $875 million, for a total of more than $1.6 billion in new capital.”
“The new era is rooted in a powerful truth: Africa's most valuable resource is not its oil, it's not its diamonds, it is the talent and creativity of its people. So we are partnering with African leaders to empower their people to lift up their nations and write a new chapter in their history…The best way to generate economic growth in Africa is to expand trade and investment,” President Bush said.
OPIC President and CEO Robert Mosbacher, Jr. said, “Establishment of these five new investment funds represents additional, tangible support for Africa, but with a dynamic focus on the social aspects of economic development and job creation on the continent.”
“These funds will encourage the growth of sectors critical to Africa’s ongoing development, such as housing and telecommunications, as well as other developmental sectors, including health care and small businesses. Their overall impact will be to broaden African capital markets and provide critical investment for social development, a model that can be replicated in other geographic areas.”
OPIC’s Board of Directors approved financing to support the funds at its January 31 meeting. More information about OPIC’s Africa-related investment funds can be found here.
Three of the new OPIC-supported funds will help to bring new levels of efficiency and productivity to sectors critical to the continent’s continued economic growth: health care, housing development and telecommunications. The two other funds will support the growth of Africa’s debt capital markets and its SME sector.
Africa Health Care Fund
Target capitalization: $100 million
OPIC contribution: $50 million
The fund will invest in small and medium-sized private health care delivery businesses in sub-Saharan Africa, with an initial focus on Ghana, Kenya, South Africa and Uganda. Specifically, it will target businesses that directly increase working peoples’ access to quality health care, seeking out enterprises with a demonstrated market-based approach, including clinics, hospitals, diagnostic laboratories, medical equipment, pharmaceutical production and distribution, health insurance, and other health service companies. The Fund will also invest in enterprises that support the training of health care professionals. On average, more families in Africa now seek health care from private sector providers than public sector providers.
OPIC selected as fund manager a company 51 percent owned by Seven Seas Capital Management, a US company, and 49 percent owned by Indigo Venture Partners, a South African firm.
Capital Alliance Property Investment Company
Target capitalization: $200 million
OPIC contribution: $50 million
The fund will invest in major cities across West Africa, with a focus on housing projects catering to lower-middle and upper-middle income populations; commercial, retail, mixed-use and hospitality development projects; and, potentially, publicly-traded real estate companies. The fund expects to invest 75 percent to 80 percent of its capital in Nigeria.
By increasing the amount of residential and commercial housing available to residents, the fund’s investments will in turn boost the local mortgage markets. It should also attract local and foreign capital from experienced property developers seeking to exploit real estate opportunities in the region.
OPIC selected as fund manager African Capital Alliance, a New York- and Nigeria-based company that manages more than $165 million of private equity on the continent.
Africa Telecoms Media and Technology Fund
Target Capitalization: $100 million
OPIC contribution: $50 million
The fund will invest in technology, media and communications companies, primarily in Kenya and Tanzania, and potentially in Malawi, Rwanda and Uganda. By building a state-of-the art broadband network in eastern Africa, the fund will offer improved telecommunications products and services to consumers for lower prices. To do so, it will implement advanced technologies, such as fiber optic cable and wireless networks. Consequently, the fund will have strong multiplier and economic diversification effects, by providing local SMEs with lower telecommunications costs, better IT infrastructure, and new services that will improve their efficiency. The fund also plans to provide broadband service to rural communities that have poor coverage for phone, internet and TV services.
OPIC selected as fund manager East Africa Capital Partners, a US company whose principals have participated in some of the largest telecommunications and media transactions in Europe over the past ten years.
Africa Debt Fund
Target capitalization: $300 million
OPIC contribution: $100 million
The fund will invest in a range of public and private debt instruments in Africa, most likely a mix of African government and corporate debt securities, issued in both local and external currencies. While the fund will focus on privately-negotiated debt transactions with private enterprises, it will also be able to invest up to 30 percent of its capital in secondary market purchases and sovereign debt securities. Its overall goal is to support financial instrument innovation and capital market development by expanding the pool of available investment securities in the Africa region, particularly in the areas of sovereign and corporate debt. Ultimately, the fund will provide local indigenous African companies with little access to financing the capital they need to increase their operations and ultimate profitability.
OPIC selected as fund manager a joint venture of Standard Asset Management, an investment firm with $1.5 billion under management in several high yield and emerging market debt strategies, and STANLIB, a Johannesburg-based asset management firm with $40 billion under management.
AfricInvest II
Target capitalization: $175 million
OPIC contribution: $60 million
The fund will invest in SMEs in OPIC-eligible countries in North Africa and Sub-Saharan Africa, with a particular focus on Morocco, Algeria, Tunisia, French West Africa, Nigeria, Ghana, and Kenya. It will contribute to economic development on the continent by lowering production costs in strategic sectors such as pharmaceuticals and food processing, thereby making consumer products more affordable; by attracting educated African professionals returning from North America or Europe; and by creating joint ventures between African companies and North American and European companies.
Targeted sectors will include consumer products and services, retail, food and beverage, packaging, financial services, information technology, telecommunications, education, healthcare, tourism, transportation and distribution, and manufacturing.
OPIC selected as fund manager AfricInvest Capital Partners, a newly-formed company 75 percent owned by Tuninvest Holding and 25 percent owned by FMO, a development bank of the Netherlands.
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.