|The questions and answers below were developed to provide applicants with general guidelines regarding the terms, structure and form of OPIC’s participation. Final terms will be negotiated with finalists prior to commitment. Those indicated with an asterisks were developed from inquiries sent to OPIC from applicants to this Call for Proposals. They should be viewed as a supplement to the Frequently Asked Questions
For a PDF of the FAQs, please click here. For a PDF of the supplemental Q&As, please click here.
Structure and Form of Participation
STRUCTURE AND FORM OF PARTICIPATION
1(a) What structure does OPIC expect the fund to have?
OPIC seeks innovative proposals and will remain flexible in reviewing the proposed structures put forth by the respondents. OPIC has experience participating in a broad range of fund structures (e.g., master-feeder fund structures, parallel or co-investment vehicles) and will consider other innovative fund structures (limited life, evergreen, debt, equity, etc.).
1(b) How much does OPIC invest in private equity funds, and at what point is the OPIC funding available?
OPIC seeks to provide no less than $35 million and no more than $150 million in debt financing per fund. OPIC generally provides no more than one-third of a fund’s total capital (i.e., an amount equal to fifty percent of the equity capital raised for that fund). Applicants are encouraged to request the proportion of OPIC financing that is appropriate for their fund’s strategy, and OPIC’s loan is typically drawn on a pro rata basis with equity capital.
Please note that OPIC is willing to fund part of its total commitment as part of a first closing on a pro rata basis with equity if the fund has reached its first close. Also note that OPIC makes loans in US dollars only.
1(c) Do all OPIC funds have uniform terms?
Each fund OPIC supports is different and the terms of OPIC's support are negotiated on a case-by-case basis, taking into account such factors as investor risk appetite, fund return targets, and investment strategy. While illustrative examples are provided herein, they are by no means exhaustive.
1(d) How does OPIC invest in private equity funds?
OPIC provides its support to private equity funds in the form of a structured senior loan (with mezzanine-like features), rather than as equity.
1(e) What loan tenors are acceptable to OPIC?
OPIC can extend credit for relatively long tenors that are generally coterminous with the fund's life.
1(f) Will the loan be non-recourse to the fund's LPs and sponsors?
In general, the loan is non-recourse to the fund's limited partners and sponsors. The fund managers, general partner or fund itself are expected to pay organizational and start up costs (including certain OPIC related expenses) in connection with the fund.
1(g) What is the maximum drawdown period of OPIC financing?
OPIC generally provides a maximum drawdown period of up to six (6) years, but this can be extended based on a fund’s strategy and investment thesis.
1(h) Under OPIC's terms are there any restrictions on the types of instruments the fund can use for its investments?
OPIC’s objective is to support long-term capital investment in new companies, expansions, restructuring capitalizations, or privatizations. The fund can use whatever instruments it deems most suitable, such as equity and equity-related investments, participating debt, and other structures that are appropriate for the local investment environment.
1(i) For what purposes can the OPIC loan be used?
Generally, the OPIC loan can be used to (i) finance portfolio company acquisitions, (ii) finance OPIC related expenses, and (iii) finance fund related expenses.
1(j) Is the Call restricted to vehicles focused on creating a portfolio of investments?
Yes, through this Call, OPIC seeks to support investment vehicles that (1) are managed professionally, (2) target a pool of investments, and (3) raise additional equity capital from third parties.
1(k) Will OPIC provide grants, technical assistance, equity or first loss capital to funds selected through the Call?
OPIC will not provide grants, technical assistance, equity or first loss capital as part of this Call.
1(l) Will OPIC consider Funds that are smaller than $100 million?*
In this Call, OPIC will not consider Funds that are less than $50 million in total capital, but will consider funds that are greater than $50 million but less than $100 million on a case by case basis. OPIC’s participation would be limited to no more than 1/3 of the fund’s total capital.
1(m) Would OPIC consider coming into a fund after a first close? If so, how does the true-up process work? Is it possible to draw down from OPIC disproportionately more than its pro rata in order to true up to equity that’s already been funded?*
OPIC has come into funds that have reached their first close and have begun investing, and can fund disproportionately in order to true up to the cost basis of historical investments in the fund.
1(n) If a fund’s geographic focus includes countries that are not eligible for OPIC assistance, can OPIC consider a carve-out option to enable OPIC to support only those investments in OPIC-eligible countries?*
OPIC has and can provide financing to special purpose vehicles wholly owned by funds which invest in only those portfolio companies which meet OPIC’s policy requirements.
2(a) What are the terms of repayment of the OPIC loan?
The OPIC loan can be structured as a fixed-rate or floating rate US dollar-denominated obligation, with interest accreting and compounding semi-annually. The OPIC loan becomes contractually due (including interest) upon the fund maturity date; however partial or full prepayments are routinely made upon the occurrence of liquidity events or dividend payouts.
The OPIC loan can also be structured as a current pay obligation if the fund manager so chooses and has a regular and reliable source of cash flow to service the loan.
2(b) What interest rates will be charged on the OPIC loan?
OPIC typically funds its commitments by raising debt from institutional investors in the U.S. capital markets through the issuance of certificates of participation (“COPs”). This debt is backed by the full faith and credit of the U.S. Government, and is passed through to finance OPIC’s disbursements to the fund.
The OPIC loan made to the fund will bear an interest rate (the “Base Rate”) comprised of US Treasury STRIPS and a market premium; this all-in rate is determined separately for each disbursement and is based on requested tenor and market timing. The Base Rate will accrete and compound semi-annually.
2(c) Does the OPIC guaranteed financing need to be fully repaid before any return of capital to equity investors?
No, the OPIC-guaranteed financing does not need to be fully repaid before any return of capital to equity investors. Repayment of the OPIC loan can occur on a pro-rata basis with the return of equity contributions, provided no event of default (predefined) is active and the fund performs above a certain predefined level (e.g. net asset value test).
2(d) What are the anticipated OPIC fees and expenses to be paid by a fund?
The fund manager or the fund, as applicable, will be required to pay:
2(e) Does OPIC expect to participate in the Fund's profits?
OPIC’s Legal Expenses to document its financing for a given fund;
A one-time Facility Fee calculated as a percentage (up to 15 basis points) of OPIC’s commitment ;
A Commitment Fee of up to 50 basis points on the undisbursed principal amount of the OPIC commitment (paid semi-annually); and
Annual Current Interest of up to 150 basis points on the outstanding loan balance (including capitalized interest), paid semi-annually.
OPIC is paid a relatively small share of the fund’s cash distributions that remain after the OPIC loan has been repaid and investors have recovered their full equity contributions. This amount is negotiated between OPIC and the general partner.
2(f) Does OPIC allow for the Fund Manager to receive management fees on the OPIC commitment amount?*
Typically, OPIC allows the Fund Manager to receive management fees on the OPIC commitment amount during the fund’s investment period, and on total invested capital thereafter, or in accordance with the terms of the fund’s organizational documents.
2(g) Does the cost of the OPIC debt take into account the relative risk-return profile of the underlying investments?*
The OPIC financing is made to a cross collateralized, diversified portfolio of investments; the relative risk-return profile of the portfolio is taken into consideration in determining OPIC’s fees and profit participation. The Base Interest, however, is a market rate based on the prevailing US Treasury STRIPS rate, and is determined at each disbursement. (See FAQ’s, question 2(b)).
2(h) Will OPIC consider supporting mezzanine debt funds, infrastructure debt funds, or other debt funds?*
OPIC will in this Call consider supporting mezzanine debt funds, funds of funds, and other alternative fund structures. The terms of the OPIC facility will be negotiated based on each fund’s characteristics.
3(a) Does OPIC participate in investment decisions of the fund manager?
OPIC does not participate in the commercial decision making of the fund manager. As a lender to the fund, OPIC requests a non-voting, observer seat on the fund’s advisory board.
3(b) What are OPIC’s policy requirements for investments?
All investments made using OPIC proceeds must comply with OPIC’s policy requirements related to environment, workers rights, human rights, development impact, and impact on the U.S. economy.
More information is available about OPIC’s policy requirements on the website at http://www.opic.gov/doing-business-us/OPIC-policies
3(c) Will there be any investment or allocation restrictions based on stage, sector or industry or geography?
OPIC expects a fund to build a diversified portfolio of investments to avoid imprudent concentrations. OPIC typically looks to the fund's organizational documents and investment guidelines for language governing such diversification.
3(d) What are the OPIC eligible countries?
The OPIC eligible countries are listed on OPIC’s website here.
3(e) Is OPIC open in Myanmar?*
Currently OPIC’s programs are closed in Myanmar. The OPIC eligble countries are listed on OPIC’s website here.
3(f) How does OPIC monitor on an ongoing basis compliance with its policy requirements?*
OPIC primarily relies on the representations made by the GP/fund manager that the fund is in compliance with ESG and other policy requirements. In addition, the GP/fund manager is required to provide OPIC with a Self Monitoring Questionnaire annually on each portfolio company in which OPIC’s funds are invested. In addition, OPIC’s Office of Investment Policy sends monitoring teams to the field to visit on a periodic basis a random sample of fund portfolio companies.
4(a) Will OPIC require that the fund and/or the fund manager be U.S.-owned?
OPIC seeks to support funds that have U.S. participation in either the ownership of the fund manager/general partner, or in 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 manager/general partner will seek to raise equity capital from U.S. Persons equivalent to 25% of OPIC’s expected commitment.
For example, if the manager of a fund with total capital of $300 million, comprising $200 million equity and $100 million OPIC debt, is not majority U.S.-owned, OPIC would expect the fund manager/general partner to raise $25 million of the $200 million in equity from U.S. investors.
4(b) Does the fund have to be domiciled in the U.S.?
No. However, the Fund should be domiciled in a jurisdiction with adequate legal certainty such that OPIC will be comfortable its agreements with the Fund will be enforceable in that jurisdiction.\
4(c) Is the International Finance Corporation (IFC) which is headquartered in Washington, DC, considered by OPIC to be a US investor?*
No, the IFC is a multilateral development finance institution and does not qualify as a U.S. investor.
5(a) How many funds will be selected from the Call?
OPIC reserves the right to not select any or to select more than one proposal.
5(b) Are first time managers eligible for OPIC funding?
First time fund managers are eligible for OPIC funding. However, the fund manager’s investment thesis should be reflective of both the investment team’s prior successful track record and its in-country and/or regional experience.
All fund managers will also be expected to demonstrate an ability to manage the OPIC debt facility, understand its impact on fund performance and manage investments in accordance with best practice for ESG and “know your customer” risks.
5(c) Does OPIC have a specific sector preference?
OPIC does not have a distinct preference for any specific sector. However, special consideration could be given to funds that focus on sectors that meet the Agency’s policy objectives, and funds that include sectors that will have a developmental impact on the countries in which they invest. A fund should define its target sector(s).
5(d) Does OPIC have specific geographic or regional preference?
OPIC does not have a defined regional or country preference for this Call. OPIC is open to invest in all OPIC eligible countries and will take all relevant information into account, including OPIC’s existing geographical exposures; though a fund should define its target geography.
Special consideration may be given to fund managers investing in infrastructure and infrastructure-related sectors within sub-Saharan Africa, including energy and energy-related services.
5(e) Will we be required to submit any additional information?
After reviewing your proposal, should OPIC’s due diligence proceed, finalists will be asked to:
5(f) Can OPIC provide Political Risk Insurance to funds?
Answer additional questions and provide additional information to OPIC and its Advisor ( e.g. references, more detailed track record information ESG policies and procedures, investment process);
Visit OPIC’s offices in Washington, DC for an interview with OPIC’s evaluation committee;
Make your staff available for additional detailed onsite and offsite due diligence;
Make available to OPIC and its Advisor information regarding past, current, and prospective portfolio investments, including the opportunity to visit sites and review financial records of selected investments; and
Complete a Sponsor Disclosure Report
Yes, where there is a certain level of involvement by US investors or other appropriate reinsurance arrangements, OPIC can insure either all of the individual investments in portfolio companies as they are made by a Fund for the benefit of all of the investors in the Fund, or the specific beneficial interests of a select group of investors in a Fund for the individual investments in portfolio companies as they are made by a Fund. Find more information here.
For frequently asked questions on OPIC political risk insurance and funds, click here.
5(g) Is it necessary that a fund be legally constituted in order to submit a proposal?*
No, it is not necessary.
5(h) Will candidates have a chance to provide OPIC with additional information?*
OPIC will select a pool of finalist candidates based solely on the materials presented as of the due date of December 2. Should your proposal be selected for further due diligence, you will be asked to submit additional materials. (Please see FAQ 5 (e) for more details.)