OPIC sees a bright future and an expanding role

WASHINGTON — As the United States Congress prepares to introduce legislation to create a new development finance corporation, the Overseas Private Investment Corporation is pushing ahead with its priorities, including examining its role in catalyzing more capital.

Congress is expected to introduce legislation in the next week or two, before the administration releases its budget recommendations, that will likely expand U.S. development finance capabilities, though the exact details of the bill are still being ironed out be legislators.

Since David Bohigian, OPIC’s executive vice president, and Ray Washburne, OPIC’s chief executive officer started their jobs in August, they have been developing a strategy for the agency and doing a lot of outreach.

“I think there are key partners that can help advance U.S. foreign policy and development goals that frankly don’t know what OPIC is,” he said. “[We] spent an enormous amount of time talking to the NGO community, the think tank community, the business community and the capital providers so they’re aware what opportunities there are overseas in emerging markets and the role that OPIC can play.”

OPIC’s strategy has three key priorities: Catalyzing capital so that the agency is crowding in additional investment, making the agency and the places where it invests more entrepreneurial, and a number of new regional and thematic initiatives, Bohigian told Devex in an interview.

OPIC continues to focus on investing in places where the private sector won’t go in on it’s own, but it will also be looking to develop products that help solve development goals, even if OPIC isn’t involved. OPIC recently invested in a development impact bond tackling eye health in Cameroon, and it sees helping pioneer such instruments as a public good that it hopes others will replicate, Bohigian said.

“I think the U.S. government can play a unique role in convening people to develop products that go beyond OPIC,” he said. “It would be an enormous social good if we can bring together parties to talk about term sheets, to be able to talk about hurdle rates they need to see, to be able to talk about the risk-reward ratio they need to see. It’s important that OPIC and others have those conversations, to understand where they could be in the capital stack anywhere from political risk insurance, to first loss, to mezzanine debt, to senior debt, to equity.”

Bohigian, who previously served as assistant secretary of Commerce has also worked in venture capital, private equity, private finance, and in hedge funds before taking up his post at OPIC. He brings with him an understanding of what different asset classes want and what role they can play. Blended finance will be a key growth industry in the 21st century, he said.

“Blended finance combines the best of all those pieces of the capital structure and aligns capitalism with outcomes that should no longer be considered externalities to a deal,” Bohigian said. “So I look forward to in my tenure at OPIC not only catalyzing additional capital to come into OPIC’s deals, whether thats into our private equity portfolio, or our small and medium size enterprise portfolio or our portfolio for impact.”

OPIC is also working to have the projects it supports create an entrepreneurial environment in the countries where they are located, Bohigian said.

OPIC has a new initiative focused on on the northern triangle in Latin America — El Salvador, Honduras, and Guatemala — which is trying to create good jobs and stabilize societies. In the Middle East, OPIC is investing in some cross-border infrastructure projects in Jordan, Egypt, Israel, and the Palestinian Authority. OPIC is also working with investors in the Indo-Pacific region and looking to build on Power Africa through investments in “full spectrum energy” on the continent and other infrastructure investments.

OPIC has also launched a new women’s initiative that is focused on how to empower women and stabilize communities.

“The women’s economy is equal to that of India and China combined, there is an amazing opportunity to stabilize families and stabilize societies by investing in women’s empowerment both through women-owned firms as well as companies, projects, and technologies that empower women and families,” he said.

Read more Devex coverage on the Overseas Private Investment Corporation.