OPIC Commits $87.5 Million to First Fund-of-Funds, Supporting Impact Investment
Monday, May 14, 2012
WASHINGTON, D.C. – The Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, today signed a commitment letter pledging $87.5 million in financing for the first fund-of-funds in the agency’s portfolio, the latest step in OPIC’s support for the fast-growing impact investment sector.
The Sarona Frontier Markets Fund 2 LP proposes to invest in 12-18 private equity funds that target market- based returns while investing in small and medium-sized enterprises (SMEs) in frontier and emerging markets, which are expected to contribute employment, wealth creation, and access to goods and services to underserved populations.
OPIC’s Board of Directors approved the Sarona Fund last October as part of the agency’s support for six new investment funds that aim to inject $875 million into the impact investment sector – the largest U.S. government commitment to impact investing in emerging markets to date. Sarona has a target capitalization of $250 million.
The Sarona fund will be managed by Sarona Asset Management, Inc., an Ontario company recently spun out of Mennonite Economic Development Associates Inc. (MEDA), a Pennsylvania non-profit corporation dedicated to creating business solutions to poverty. MEDA and its subsidiaries, MEDA Investments Inc. and Sarona Asset Management Inc., have been investing in small to mid-market businesses in developing countries since 1953.
“The Sarona fund-of-funds represents the best of impact investing,” said OPIC President and CEO Elizabeth Littlefield. “It will raise capital from investors attracted by stable financial returns combined with measureable development impacts; bring environmental, social and governance standards to each of its investments; and ultimately invest in high-growth SMEs in frontier markets, which in turn will generate employment, wealth creation, and access to goods and services for underserved populations.”
The signing of the OPIC commitment preceded a meeting of general partners managing OPIC-supported private equity investment funds, hosted by the agency’s Investment Funds Department.
OPIC is the U.S. Government’s development finance institution. It mobilizes private capital to help solve critical development challenges and in doing so, advances U.S. foreign policy. Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets catalyzing revenues, jobs and growth opportunities both at home and abroad. OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.
Established as an agency of the U.S. Government in 1971, OPIC operates on a self-sustaining basis at no net cost to American taxpayers. OPIC services are available for new and expanding business enterprises in more than 150 countries worldwide. To date, OPIC has supported more than $200 billion of investment in over 4,000 projects, generated an estimated $75 billion in U.S. exports and supported more than 276,000 American jobs.