Using the tools of business to create social good
Impact Investing is capturing the imagination of investors and entrepreneurs all over the world. Impact investments aim to transform capital into answers for common challenges such as access to education, financial inclusion, housing, healthcare and climate change, while at the same time generating sufficient returns to constitute viable investments. With over 40 years of history investing in emerging markets, OPIC continues to innovate with new products and services to support impact investing.
Impact Investing builds on the concept of socially-responsible investing (SRI), which screens publicly listed securities for high standards related to the environment, human and worker rights, and corporate governance. While all the projects that OPIC supports aim to achieve a positive developmental impact, a smaller subset meet OPIC’s narrower definition of impact investments.
In reviewing OPIC’s portfolio for 2013, OPIC’s support of impact investing is represented by two numbers. OPIC’s methodology for grouping these projects not only highlights the distinct investments with a positive impact intent, but also identifies projects whose work in recognized sectors undoubtedly contributes to development impact.
$222 Million – Impact Investing with clear intent. This is a term OPIC uses when the partners we support design their very business models with an explicit and foundational aim to address social or environmental problems while generating stable financial returns.
Examples of these Impact Intent projects include support for a network of schools throughout rural Kenya that provides world-class curriculum for $60 per year and a $45 million loan to FINCA, a microfinance lending institution that operates in developing markets across three continents to break the cycle of poverty through community-based credit and savings opportunities.
$2.7 billion – Investing in recognized Impact Sectors. More than two-thirds of OPIC’s $3.9 commitments in 2013 were in sectors that OPIC and the development finance community recognize as fostering positive social and economic good, such as agriculture, education, access to finance, housing for the poor, small and medium enterprise finance, healthcare, renewable energy, water and sanitation.
The 2013 Impact Sector OPIC commitments included more than $950 million in financing vehicles for small and medium-sized enterprises (SME) and more than $1.2 billion for renewable energy projects. Examples of these projects include financial support for Guatemalan SME lenders that will be the backbone of development impact for thousands of small entrepreneurs and financing to build a power plant in Peru with exemplary labor and social policies.
OPIC has a long history of transforming private capital into solutions for common social and environmental challenges around the world, and today is the largest impact investor in the U.S. Government.
Other projects in OPIC 2013 Impact Investing Portfolio include:
Latin America: $15 million in financing to Seattle-based Global Partnerships for microfinance lending across Latin America, with particular focus on institutions that provide services in health services, rural livelihoods, green technology, and microentrepreneurship.
Rwanda: Political risk insurance to Arkansas-based Westrock Coffee Holdings, to support modernization of a coffee milling and processing plant in Kigali. Westrock has helped transform Rwanda’s coffee sector by investing in facilities, training and sustainable farming and business practices, and by connecting farmers with international buyers.
Chile: $147.5 million in financing to SunEdison to construct the largest solar photovoltaic field in Latin America in Chile’s Atacama Desert. The Atacama is one of the world’s most abundant regions for solar energy, but has seen little development in that sector.
Malaysia: $250 million in financing for Academic Medical Center in Malaysia, which will offer services and treatments that meet the highest international standards, serve people of all income levels and advance Malaysia’s goal of becoming a regional and worldwide healthcare hub. In addition to increasing access to quality healthcare, the project is expected to create about 2,000 local jobs.