Call for Proposals
Overview Proposal Checklist FAQs Attachment 1: Track Record Table	Submit a Question Submit a Proposal Supplemental Information OPIC Political Risk Insurance

 
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.

1. STRUCTURE AND FORM OF PARTICIPATION

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 (e.g., consortiums, special purpose vehicles).
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 financing per fund. OPIC generally provides up to one-third of a fund's total capital, i.e., an amount equal to fifty percent of the equity capital raised for that fund, but may be more or less depending on the structure, strategy or needs of the fund. Applicants are encouraged to request a proportion of OPIC financing that is appropriate for their Fund's strategy, and OPIC's loan would be 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 is financially viable at that point, even if fundraising will continue until a later final closing.
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 a fund's investment strategy. The following questions and answers are intended to illustrate some general principles around which OPIC funds are organized, but are by no means exhaustive.
How does OPIC invest in Private Equity Funds?	OPIC typically provides its support to private equity funds in the form of a senior, secured loan, rather than as an equity investor or limited partner. OPIC sells participations in these loans to institutional investors in the U.S. capital markets. The certificates of participation ("COPs") in these loans are backed with OPIC's U.S. Government full faith and credit guaranty. Proceeds from the sale of COPs to institutional investors ("COP holders") are used to fund OPIC's loan to the fund.
What loan tenors are acceptable to OPIC?	OPIC can extend credit for relatively long tenors that are generally coterminous with the fund's life.
Will the loan be non-recourse to the Fund’s LPs?	Yes, the loan will be non-recourse to the Fund’s LPs.
What is the maximum drawdown period of OPIC financing?	OPIC generally provides a maximum drawdown period of up to 6 years, but can be extended based on a fund's strategy and investment thesis.
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, patient 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.
Should OPIC not participate in the first close of the fund, will OPIC require participation in investments already made?	While OPIC does not require participation in investments that have been made prior to OPIC's closing in the fund, OPIC would prefer to participate in all eligible portfolio companies of the fund.
Will OPIC provide grants, technical assistance, equity or first loss capital to funds selected through the Call?	No, OPIC will not provide grants, technical assistance, equity or first loss capital.
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.

2. ECONOMIC ISSUES

What interest rates will be charged on the OPIC loan?	Typically an OPIC-guaranteed loan will bear Base Interest, paid to the COP holders, at a prevailing rate based on the rate for U.S. Treasury STRIPs with comparable terms and tenor determined separately for each disbursement. In addition, there is a premium over U.S. Treasury STRIPs which COP holders require; this premium is based on market conditions at each disbursement. Interest (including the OPIC premium) will accrete and compound semi-annually.
Does OPIC expect to participate in the Fund's capital gain?	OPIC is paid a minimal share in cash distributions from the fund after the OPIC-guaranteed loan has been repaid and investors have recovered their full equity investment in the fund. This participation would be negotiated between OPIC and the general partner of the fund. In addition, OPIC does not take any part of the manager's/general partner's carried interest.
Does the OPIC guaranteed financing need to be fully repaid before any return of capital to equity investors?	OPIC can allow for equity investors to receive distributions on a pro rata basis with OPIC, under a “Waterfall” formula generally described below. Proceeds from exited investments may be used in the following general priority in the earlier years of the fund: a) to pay expenses of the fund; b) to provide for reserves for future fund expenses; c) to fund investments; d) to make tax distributions to equity investors; and,  e) to make payments on OPIC-guaranteed loans along with applicable premiums. After providing for the foregoing, an OPIC-supported fund may, during the early years of a fund's life (typically, the first seven years of a ten-year fund), make concurrent distributions to equity and debt participants in a fund, on a pro rata basis, as long as a negotiated prescribed debt to equity ratio is maintained. During the later years of a fund's life, and to the extent that OPIC-guaranteed loans and interest have not been satisfied, distributions are generally required first to be made to meet those obligations. Should the proscribed debt to equity ratio not be maintained, OPIC would receive all fund distributions until the ratio is met.
What are the terms of repayment of the OPIC loan?	OPIC's loan can be structured as a fixed-rate obligation, with Base Interest (defined below) accruing so that no repayment is required until the portfolio is liquidated. Current Interest (defined below) is paid semi-annually following the first disbursement of OPIC's loan. OPIC can also structure its loan as a current pay obligation if the fund has a reliable source of cash flow to service the loan.
What are the funding costs associated with the OPIC financing?	Typically, an OPIC-guaranteed loan will bear a base interest comprising (a) the rate for U.S. Treasury securities with comparable terms and tenor determined separately for each disbursement, and (b) a premium over U.S. Treasury securities, which COP holders require ("Base Interest"). Base Interest will accrete and compound semi-annually.
What are the anticipated OPIC fees and expenses to be paid by a Fund?	The fund manager or the Vehicle, as applicable, will be required to pay: a) OPIC’s legal expenses to document its financing for a fund; b) a one-time facility fee calculated as a small percentage (up to 15 basis points) of OPIC’s potential commitment, which defrays part of OPIC’s due diligence expenses; c) a commitment fee on the undisbursed principal amount of the OPIC commitment (paid semi-annually from the time the finance agreement is signed) of up to 50 basis points; and d) annual “Current Interest” (guaranty fee) of up to 150 basis points on the outstanding loan balance (including capitalized interest).

3. MANAGEMENT ISSUES

Does OPIC participate in investment decisions of the Fund manager?	OPIC does not participate in the commercial decision making of the fund manager. OPIC's role is as a lender to the fund, and requests a non-voting seat on the fund's Advisory Board.
What are OPIC's policy requirements for investments?	Investments 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/what-we-offer/investment-funds.
Will there be any investment or allocation restrictions based on stage, sector or industry or geography?	OPIC would expect the fund to build a diversified portfolio and anticipates that the fund's organizational and financial documents will contain language to encourage such diversification and to avoid imprudent concentrations.
What are the OPIC eligible countries?	The OPIC eligible countries are listed on OPIC's website at http://www.opic.gov/what-we-offer/where-we-work.
Does OPIC require portfolio companies to be domiciled in OPIC eligible countries?	No, OPIC does not require a portfolio company to be domiciled in an OPIC eligible country. However, the substantial majority of a portfolio company's business must be generated in OPIC eligible countries.

4. U.S. PARTICIPATION

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 sponsor to raise $25 million of the $200 million in equity from U.S. investors. "U.S. Persons" means (a) U.S. citizens, (b) U.S. corporations, partnerships, trusts, and similar entities that are more than 50% beneficially owned by U.S. citizens, or (c) foreign entities wholly owned by U.S. citizens.

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.

5. OPIC POLITICAL RISK INSURANCE

What does OPIC political risk insurance (PRI) cover and what can be included in a PRI Facility?	Political risk insurance can cover an investor's losses resulting from currency inconvertibility (the inability to convert or transfer local currency constituting earnings from or returns of an insured investment), expropriation (actions by the foreign government authority that deprive the insured investor of its fundamental rights and have the effect of a "taking" without prompt, adequate, and effective compensation), and political violence (violent acts undertaken to achieve a political objective and resulting in the damage or loss of tangible assets or business income) for investments made by the Fund in OPIC eligible countries (defined above). Within these general categories, the specific coverage can be tailored as broadly or as narrowly as needed for specific investments and can include protection against governmental actions and political violence that cause losses to the Fund's investments in any portfolio company. For example: • Discriminatory changes of laws or regulations • Breach of contract, agreement, or obligation (e.g. power purchase, concession, technical or management services agreements) • Contract frustration or denial of justice • Non-payment of an arbitral award • Interference with or denial of carbon credits, feed-in tariffs, etc. in violation of law or agreement • Nationalization, confiscation, expropriation (including "creeping" expropriation) • Changes in currency convertibility or right of transfer or repatriation • Civil strife, insurrection, terrorism, sabotage, war, civil war OPIC's Products Provide • Coverage for up to 20 years for equity investments made by the Fund • Guaranteed rates for the entire term of the insurance contract • Non-cancellable coverage for the entire term of the insurance contract • Insurance backed by Full Faith and Credit of the U.S. government • Claims avoidance through advocacy by various U.S. government agencies on behalf of the investor • Transparent and fair claims determinations
How can I get a preliminary indication of the scope of coverage available and cost estimate for my Fund?	A preliminary indicative term sheet can be made available once OPIC Insurance has received a request for OPIC political risk insurance (see http://www.opic.gov/what-we-offer/apply) and has had a discussion with the Fund manager or sponsors in order to develop a scope of coverage tailored to the needs of the Fund manager and sponsors. In general, the cost will depend on risks to be covered and countries where the investments will be made. The base premium rates available on OPIC's website are applicable for individual projects and can be used as a starting reference. A Fund that needs a broad package of coverage for a reasonably well diversified portfolio of investments in projects with relatively low risk profiles in a diverse set of countries can expect substantially lower premium rates if all of the Fund's investments are included in the PRI Facility. Conversely, the cost for a portfolio of investments in just one or a few countries in a high risk region, for a sub-set of investments in projects that themselves have high risk profiles, and with a narrower package of coverage will be closer to the base premium rates (see http://www.opic.gov/what-we-offer/political-risk-insurance/details-costs).  Broader coverage may also be requested on a project-by-project basis or as semi-automatic add-on at modest additional cost. For further information, questions should be directed to Jim Williams, Director for Insurance and Reinsurance at 202 336-8575 or via email (Jim.Williams@opic.gov).
Are investments in all Funds selected in this Call eligible for OPIC political risk insurance?	OPIC can provide direct PRI insurance to investors or Funds that are "US eligible investors." Under appropriate circumstances, OPIC can also support coverage for a broader group of Funds or investors through an OPIC-sponsored PRI Facility in partnership with a private sector insurer that is backed with a reinsurance facility and OPIC's AAA rating. The OPIC-sponsored reinsurance PRI facility is used when the insured party is not a U.S. entity. Click here for information about typical OPIC PRI Facilities for Private Equity Investment Funds.
Is OPIC financing or political risk insurance available for stand-alone projects?	Yes, OPIC can provide loans, guarantees and insurance for qualifying stand-alone projects through its regular finance and insurance programs. Project sponsors who are interested in OPIC support for individual projects should visit OPIC's website at http://www.opic.gov/ .

6. OTHER

How many funds will be selected from the Call?	OPIC reserves the right not to select any proposal or to select more than one.
Are first time managers eligible for OPIC funding?	First time fund managers are eligible for OPIC funding. However, a fund's thesis should reflect the investment team's prior successful track record and its in-country and/or regional experience.
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).
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 portfolio exposures, though a fund should define its target geography(ies).
Will we be required to submit any additional information?	After reviewing your proposal, should our due diligence proceed, finalists may be asked to: 1. Answer additional questions and provide additional information, e.g. list of references, more detailed track record information (cash flows of past funds, company information); 2. Complete a Sponsor Disclosure Report; 3. Visit OPIC's offices for an interview; 4. Make your staff available for additional detailed onsite and offsite due diligence; and 5. Make available to OPIC information regarding past and current portfolio investments, including the opportunity to visit sites and review financial records of selected investments.