OPIC Board Approves $75 Million for First Mezzanine Investment Fund
June 20, 2012
SMEs in Central and Eastern Europe to benefit; target capitalization of €250 million
WASHINGTON, D.C. – The Board of Directors of the Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, approved $75 million in financing for the first investment fund focused on making mezzanine debt investments ever to be supported by the agency. The fund will invest in small and medium-sized enterprises (SMEs) in Central and Eastern Europe (CEE), where the global financial crisis has severely restricted capital critical for SMEs’ growth.
The Accession Mezzanine Capital III L.P. fund will invest in SMEs looking to expand by providing mezzanine debt – subordinated financing which is senior only to that of equity shares – primarily in Bulgaria, Czech Republic, Poland, Romania and Ukraine. The fund has a target capitalization of approximately €250 million.
“The mezzanine capital provided by this fund will fill an enormous financing gap in the CEE market, particularly for SMEs for whom financing is in many cases simply unavailable,” said OPIC President and CEO Elizabeth Littlefield.
Since the start of the global financial crisis, the CEE mezzanine market has undergone a sustained contraction. Whereas a number of banks, hedge funds and a limited number of dedicated mezzanine funds were active in the market pre-crisis, many have since exited and are not expected to return for the foreseeable future.
“Equally important, Accession Mezzanine Capital III L.P. represents a major milestone in the development of OPIC’s investment funds program. Making mezzanine financing available to emerging markets where capital is scarce should unlock exciting new growth opportunities for SMEs in developing countries the world over,” Ms. Littlefield said.
OPIC selected as fund manager Mezzanine Capital Partners, a pioneer mezzanine fund manager in the CEE market with one of the largest on-the-ground networks among private equity firms in the region. Over the past 12 years, it has successfully raised and invested two funds, and currently has offices in Vienna, Warsaw, Budapest, Bucharest, Kiev and Prague.
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.