OPIC Board Approves $360 Million for Investment Funds Targeting Consumer Populations in Africa, Indonesia & Russia
September 13, 2012
(OPIC)
Will tap middle-market opportunities in
undercapitalized countries; funds’ combined
target capitalization is $1.2 billion
WASHINGTON, D.C. – Emerging middle classes in
Africa, Indonesia and Russia – all fast-growing
markets with lucrative return potential –
received a boost today when the Board of
Directors of the Overseas Private Investment
Corporation (OPIC) approved $360 million in
financing for three investment funds targeting
consumer populations in each. The funds have a
combined target capitalization of $1.2
billion.
The growth of the middle class in each of these
markets is ongoing but often ignored by
investors:
Africa is consistently growing faster than
almost any other region of the world, with a
dozen countries having averaged at least six
percent growth for six or more years. By 2015,
100 million African households are expected to
have annual incomes above $3,000 a year, an
increase of 40 million from 2011, putting
Africa on par with India.
Russia’s economy is expected to grow twice
as fast as the United States’ in the next four
years, driven largely by domestic demand. With
the world’s ninth largest population, Russia
became the world’s eighth-largest retail market
in 2006, although official numbers probably
underestimate its size—surpassing Brazil,
Mexico, Spain, and Italy.
Indonesia is forecasted to accelerate its
six percent growth rate in the coming years,
fueled mainly by private consumption. Economic
growth has kept pace with population growth and
transformed the world’s fourth most populous
country from a low-income country to a
mid-income country by the mid 1990s.
“Emerging middle classes in markets such as
Africa, Indonesia and Russia are a vital
foundation of long-term economic growth,” said
OPIC President and CEO Elizabeth Littlefield.
“These three funds will support sustainable
economic development by providing essential
financing to dynamic local companies serving a
growing middle class.”
All three funds were chosen from respondents to
the Global Engagement Call for Proposals OPIC
issued in November 2011, which generated an
agency record number of responses.
The funds approved by the Board were:
African Development Partners II
The Board approved up to $150 million in OPIC
financing for this pan-African fund, which will
generally invest in companies that serve
Africa’s emerging middle class, such as
financial institutions, pharmaceuticals and
hospitals, telecommunications, food service and
agribusinesses, consumer goods, education,
engineering and construction. The fund has a
target capitalization of $500 million.
The fund will help to alleviate a shortage of
long-term financing on the continent and will
emphasize environmental, social, and corporate
governance standards, supporting the
development of African economies through
sustainable investing.
OPIC selected as fund manager Development
Partners International LLP, a private equity
management group founded in 2007 and focusing
on investments across Africa.
Falcon House Partners Indonesia Fund
I
This fund will invest in Indonesia’s
fast-growing middle and lower mid-market
segments, with a focus on consumer-driven
industries, including retail, food products,
personal care products and health care. OPIC’s
Board approved up to $60 million in financing
for the fund, which has a target capitalization
of $225 million.
Indonesia is fast emerging as a profitable
destination for emerging market private equity,
driven by its strong economic fundamentals,
favorable demographics, and a demand for growth
capital that has outpaced supply, particularly
for mid-market companies. Private domestic
consumption accounted for 57 percent of
Indonesia’s gross domestic product in 2010, and
60 percent of its population is below 40 years
of age.
OPIC selected as fund manager Falcon House, one
of the most experienced fund managers in the
region.
Elbrus Capital Fund II
Russia has experienced two decades of rapidly
growing consumer spending power but, due to
decades of underinvestment during the Soviet
era, the country lags behind other regions in
both consumer and business infrastructure. Both
the government and the private sector are
currently making efforts to close this gap,
which creates attractive investment
opportunities.
This fund will invest in the consolidation of
middle-market companies in rapidly-growing
industries in Russia, helping to build
competitive businesses that respond to
unsatisfied demand across a number of critical
needs: changing consumer patterns, need for
consumer and business infrastructure, efficient
use of natural resources, and the increasing
need for high-quality health care and
education. It will also aim to stimulate
economic development in regions outside of
Moscow and St. Petersburg. OPIC’s Board
approved up to $150 million for the fund, which
is raising $500 million in equity in addition
to the OPIC commitment.
OPIC selected as fund manager Elbrus Capital,
which spun out of Renaissance Group, a large
Russian investment bank and wealth manager, in
2010, having operated under the Renaissance
umbrella for three years.
Welcome to the Exporting Source
Your one-stop resource for finding help to export to new customers, to learn about government export programs, to join export-promoting trade missions, to sign up for trade conferences and training, and to link to other exporting services. Whether you're an old hand at exporting or just getting started, the Exporting Source provides a place to locate foreign customers, export financing and foreign investment assistance.