American businesses in the global economy: A look at how investment in development opens new markets
At a time when the vast majority of the world’s consumers live outside the U.S., these businesses can reach more consumers by engaging in distant markets.
But how do major American brands enter and expand in emerging markets?
There’s not always a simple path, but investment often paves the way for more investment, eventually leading local businesses to adopt higher standards and attracting the attention of larger international brands.
When OPIC recently visited some of its private equity investments in Nigeria, it saw how this investment helped support growth and maturity in both the hospitality and the food and beverage industries, eventually helping two major U.S. brands, Marriott International and Coca-Cola, significantly expand their footholds in one of the world’s fastest-growing economies.
In 2010, OPIC committed financing to the Capital Alliance Property Investment Company (CAPIC) private equity fund, which invested in housing, hospitality and commercial real estate in Nigeria and some surrounding countries. One of the fund’s investments was in a chain of mid-tier business travel hotels, managed by South-Africa-based Protea Hotels. As the fund worked with Protea to improve operations and practice, the hotel chain attracted the attention of Marriott International, which in 2014 acquired Protea, doubling its presence in the Middle East and Africa.
OPIC also invested in Chi Limited, a Nigerian beverage, and snack manufacturer, through a global framework agreement with Citi. Chi used the investment to add more modern machinery, and in 2016 Coca-Cola purchased 40 percent of the company under an agreement to buy 100 percent by 2019.