OPIC Innovations Strengthen Impact of Agency's 2015 Development Portfolio
December 3, 2015
Responsive U.S. Development Finance Institution launched suite of effective initiatives and efficient processes to seamlessly bridge funding gaps for impact investing projects
WASHINGTON – The Overseas Private Investment Corporation (OPIC), the U.S. Government’s Development Finance Institution (DFI) announced its record 2015 results, driven in part by the deployment of a suite of unique tools and processes that better supports a growing market demand for impact investments, which seek to have a social or environmental benefit that can be measured alongside financial returns.
In fiscal year 2015, OPIC committed $4.4 billion overall in development finance support, with 43% - or $1.9 billion - of that committed to impactful projects in low-income countries.
The impact investing movement leverages private capital for solutions to the world’s development challenges, and has been powered in part by significant contribution from government DFIs like OPIC. In recent years OPIC has sought to support impact investing by developing new financing tools and tailored processes designed to meet the needs of impact investors and the social entrepreneurs these investors support.
OPIC’s financing and risk mitigation instruments are available in over 160 countries across the developing world for projects in high impact sectors like agriculture, education, access to finance, housing for the poor, small and medium enterprise finance, healthcare, energy, water and sanitation.
Across the world of development finance, there are funding gaps for projects of different sizes, growth stages, or business approaches, and OPIC has worked to address these gaps and support our clients by introducing new adaptations and innovations in our financing and insurance tool kit.
The 2015 results of these innovations include:
- The Portfolio for Impact (PI), a pilot program for earlier stage, highly developmental projects whose sponsors face challenges obtaining financing due to their risk profile. This program supports a select group of these small, high impact projects based on clearly defined eligibility requirements. Through PI in 2015, OPIC supported the Africa-focused microfinance group PAMIGA, which will spur 100,000 microloans across eight countries, supporting farm households with home solar power and micro-irrigation kits.
- The Innovative Financial Intermediaries Program (IFIP), a pilot to support investment vehicles and project sponsors that are smaller than those typically supported by OPIC, and which may apply innovative approaches to address specific development challenges. The IFIP pilot established a new process to consider different structures and emerging fund managers with impactful business ideas. IFIP responds more effectively to them, while leveraging the expertise and best practices within the agency’s finance and investment funds departments. In 2015 through IFIP, OPIC supported Unitus Impact Partners, LLC, whose Livelihood Impact Fund aims to increase incomes and improve the livelihoods of the working poor in India and Southeast Asia.
- The Aligned Capital Pilot Program, a matchmaking platform to connect OPIC’s applicants with US-based investors and grant providers who wish to deploy capital in high-impact sectors and developing regions. The program is designed to create new partnerships and enhance OPIC’s effectiveness in drawing private sector capital into global development, matching investors with opportunity. With promising activity from early participants in the program, Aligned Capital has the potential to spark impactful project transaction flow across the developing world.
- Green Guaranties – an innovative climate finance tool – which OPIC introduced in 2014 as an impact sector offering to mainstream investors and institutional financial portfolios. These OPIC-backed guaranties adhere to the Green Bond Principles and further confirm OPIC’s position as a leader in the world of global climate finance. As of the end of fiscal year 2015, OPIC has issued nearly $350 million in Green Guaranties, which comes alongside over $1 billion in annual renewable energy commitments for the 5th straight year.
“OPIC aims to support entrepreneurs and investors across the impact investing spectrum - from those small scale enterprises whose very business model is designed to address a social problem and who incorporate rigorous impact measurements, all the way to large scale, more mainstream investments made in high impact sectors such as education, health, and water sanitation in low income countries. The products and services we have developed are designed to help fill gaps in the market and meet the needs of early- or growth-stage enterprises seeking working capital, as well as the needs of investors looking for equity or fixed-income investments that address global challenges.” said Elizabeth Littlefield, OPIC’s President and CEO.
OPIC is the U.S. Government’s development finance institution. It mobilizes private capital to help address critical development challenges and in doing so, advances U.S. foreign policy and national security priorities. 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, political risk insurance, and support for private equity investment funds, when commercial funding cannot be obtained elsewhere. 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.
All OPIC projects adhere to high environmental and social standards and respect human rights, including worker's rights. By mandating high standards, OPIC aims to raise the industry and regional standards of the countries where it funds projects. OPIC services are available for new and expanding business enterprises in more than 160 countries worldwide.