Foreign Direct Investment
Through the ECIDA-Overseas Private Investment Corporation(OPIC) Partners Program, the ECIDA is able to provide Western New York businesses with both OPIC's finance and insurance products. These programs are designed to help American businesses invest overseas by protecting them from political risk and by providing financing.
What is the Overseas Private Investment Corporation?
OPIC is a self-sustaining federal agency that sells investment services to small, medium and large American businesses expanding into approximately 150 developing nations and emerging markets around the world. Charging user-fees for its services, OPIC operates at no net cost to the American taxpayer. OPIC's political risk insurance, project finance and investment funds fill a commercial void, create a level playing field for U.S. businesses and support development in emerging economies. Since 1971, OPIC has supported $150 billion worth of investments that will generate $66 billion in U.S. exports and create more than 257,000 American jobs.
Who are OPIC's clients, and how large is the client base?
OPIC clients are exclusively American companies. OPIC does not provide direct government-to-government aid or grants. Currently, OPIC has about 400 active clients including small, medium and large U.S. businesses. Demand for OPIC services has increased, in large measure, due to the demand for large scale private sector infrastructure projects in the developing world. U.S. companies are well positioned to compete for new infrastructure projects which have significant potential to increase U.S. exports and create U.S. jobs. OPIC helps these companies compete with their foreign counterparts for export-intensive infrastructure projects. OPIC also assists small U.S. businesses make investments in new markets, offering the kind of individualized support that small businesses need to bring their world-class goods and services abroad.
OPIC supports business projects in virtually every industrial and economic sector, including agriculture, energy, construction, natural resources, telecommunications, transportation and distribution, banking, and services among others.
What does OPIC "political risk insurance" cover?
OPIC's political risk insurance protects U.S. companies against:
- Currency inconvertibility - inability to convert profits, debt service and other returns from local currency into U.S. dollars and transfer those dollars out of the host country
- Expropriation - loss of an investment due to expropriation, nationalization or confiscation by a foreign government
- Political violence - loss of assets or income due to war, revolution, insurrection or politically motivated civil strife, terrorism or sabotage
Coverage is available for equity investments in new ventures or expansions or modernizations of existing enterprises, parent company and third party loans and loan guaranties, technical assistance agreements, cross-border leases and other forms of investment exposure. OPIC also insures contractors, exporters and financial institutions.
What kind of financing does OPIC offer?
OPIC provides medium-to long-term funding for new ventures or the expansion or modernization of existing, successful ventures involving significant equity or management participation by U.S. businesses. Rather than relying on foreign government guaranties, OPIC's limited recourse financing looks for repayment from revenues generated by the project. This allows OPIC to finance projects in countries where conventional financial institutions often are reluctant or unable to lend on such a basis. OPIC loan guaranties, used typically for larger projects, range in size from $10 million to $250 million. OPIC direct loans, reserved for projects involving U.S. small businesses and cooperatives, generally range from $2 million to $30 million. OPIC carefully analyzes the economic, technical, marketing and financial soundness of each project. There must be adequate cash flow to pay all operational costs, to service all debt, and to provide the owners with an adequate return on their investment.
For more information on Foreign Direct Investment or the Overseas Private Investment Corporation, please contact us.