Press Release
Thursday, June 7, 2007
OPIC SIGNS AGREEMENT TO CREATE $100 MILLION LENDING FACILITY SUPPORTING U.S. SMALL BUSINESS NETWORK
WASHINGTON, D.C. – Robert Mosbacher, Jr., president and CEO of the Overseas Private Investment Corporation (OPIC), announced an agreement with a leading American bank that will create a $100 million lending facility that will form the basis of a new program targeting U.S. small business projects in emerging markets.
OPIC will provide a loan guaranty to Wells Fargo HSBC Trade Bank to support a portfolio of loans to U.S. small and medium-sized enterprises (SMEs) or their affiliates for projects in OPIC-eligible countries. The project is expected to generate up to 50 loans over the life of the facility, as well as more than 1000 host country jobs by its fifth year. Loans will range from $3 million to $15 million.
The Wells Faro guaranty is the first part of a strategic alliance among financial institutions, small business consultants and law firms, all trained and certified by OPIC, to facilitate efficient delivery of OPIC funding to developmental, creditworthy SME projects. Called the Enterprise Development Network (EDN), it is intended to leverage U.S. banks' extensive grassroots networks and their existing knowledge of individual markets across the country, and extend the reach of OPIC's growing small business programs.
EDN’s structure is two-fold. First, it will support selected financial institutions, called designated lenders, in developing the network’s lending capability to American SMEs, which will enable OPIC to make better use of its staff resources. Second, a network of OPIC-approved U.S. private sector financial consultants, called loan originators, will advise SMEs in documenting and arranging international projects, which the loan originators will submit to the designated lender for financing. The selection of Trade Bank as the initial designated lender, as well as 15 loan originators, was based on their responses to recent calls for proposals issued by OPIC.
“For American lenders such as Wells Fargo, OPIC’s Enterprise Development Network has the potential to unlock an entirely new niche market for their services. It offers them a valuable opportunity to expand their client bases into dynamic emerging markets overseas, and a new means to service those clients by decreasing capital requirements for their financing,” said OPIC President and CEO Robert Mosbacher, Jr.
“For U.S. small businesses, too, the Enterprise Development Network will improve access to the kind of credit for overseas projects that is often difficult to obtain,” Mosbacher added.
An analysis commissioned by OPIC in 2004 concluded that a network such as EDN would be the most cost-effective way for OPIC to meet growing demand by American SMEs for the agency's support.
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 $164 billion worth of investments that have helped developing countries to generate more than 732,000 host-country jobs and $13 billion in host-government revenues. OPIC projects have also generated $69 billion in U.S. exports and supported more than 264,000 American jobs.