MIGA and OPIC Team Up to Support Private Equity Fund, Supporting Half a Million Small Farmers in Sub-Saharan Africa
June 9, 2014
(OPIC)
The U.S. Overseas Private Investment
Corporation (OPIC) and the Multilateral
Investment Guarantee Agency (MIGA) announced
today a $350 million political risk facility to
support agribusiness investments in countries
throughout sub-Saharan Africa, contributing to
improved food security and self-sustainability
for agricultural production in the region.
Under the facility, OPIC will serve as primary
provider of the political risk coverage that
will protect each of the investments made by
the Silverlands Fund, a private equity fund
focusing on agribusinesses in several countries
in Sub-Saharan Africa, particularly in Southern
and East Africa. MIGA as reinsurer will take
on 60 percent of the risk of each investment.
OPIC originally helped capitalize this fund in
2011.
This joint OPIC and MIGA effort is a
significant new development in the political
risk insurance marketplace. The two
institutions are cooperating effectively to
catalyze investment by private equity funds in
high-priority regions and sectors, by reserving
significant amounts of capacity to offer
coverage for all of a fund’s planned
investments. Such coverage is offered on
pre-agreed general terms and conditions and is
then tailored as project-specific coverage when
the fund makes its investments. The facilities
are expected to help attract capital for
private equity investment funds in emerging and
frontier markets by providing fund managers
with an effective instrument to mitigate losses
resulting from political violence,
expropriation and currency inconvertibility.
The Silverlands Fund plans to reach 500,000
small farmers over the next 10 years, leading
to an estimated increase in total food
production of over 1 million tons per year. The
fund aims to accomplish this by investing
across the agricultural value chain in
sub-Saharan Africa in a variety of segments
including fruit, grains, soya, sugar, poultry,
and livestock. It will adopt a “hub-outgrowers”
model, which involves close cooperation between
neighboring local small-scale farmers and the
Fund’s commercial agribusiness. The commercial
businesses will become hubs and provide a
market for local farmers as well as education,
technical assistance, and compensation for
their harvest.
“We’re very excited about this partnership
with OPIC that allows us to further our support
to sustainable investments in sub-Saharan
Africa’s agricultural sector—an area that is
essential for the region’s prosperity and food
security,” says MIGA Executive Vice President
Keiko Honda. “Cooperation with development
finance institutions such as OPIC is part of
MIGA’s mandate and allows us to maximize
efficiencies and contribute to increased flows
of foreign investment that improve lives around
the world.”
“This project represents the best of what OPIC
has to offer private capital looking to grow
their investments in emerging markets,” said
John Moran, OPIC’s Vice President for
Insurance. “Silverlands is a highly
developmental fund supporting a key sector in
one of OPIC’s priority regions. By offering
OPIC’s political risk insurance coverage in
this innovative partnership with MIGA, we are
helping Silverlands to mobilize and deploy
critically-needed new private investment in
Sub-Saharan Africa’s agricultural sector. OPIC
appreciates the opportunity to team with such a
like-minded institution on this and future
projects.”
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