OPIC commits $500m to ESG-focused private equity

The US government’s development finance institution has provided commitments in the form of senior loans to five funds that focus on agriculture in Africa and renewable energies in Asia.

The Overseas Private Investment Corporation, the US government’s development finance institution, has committed up to $500 million in senior debt to five renewable resources private equity funds. The funds, all of which focus on emerging markets, received commitments of $50 million to $150 million each.

Each of the five funds follows OPIC’s guidelines for human rights, labor, environmental, social and governance standards, according to Jay Koh, OPIC’s head of investment funds.

OPIC typically commits one-third of a fund’s capital target in debt financing. Fund managers are then responsible for finding the remaining two-thirds from other limited partners.

OPIC requested fund proposals after its president, Elizabeth Littlefield, pledged at least $300 million in loans to renewable energy-focused private equity firms in emerging markets at December’s United Nations Climate Change Conference. Five of the 56 respondents to OPIC’s Global Renewable Resources Funds RFP were chosen.

The institution supports private equity as a way to establish governance and managerial expertise that may be lacking in emerging markets.

Two of the selected funds focus on growth and efficiency models in Africa’s agricultural sector. UK-based SilverStreet Capital received the largest commitment, $150 million, for its $450 million Silverlands Fund, which focuses on developing a cooperation model between commercial farms and small farmers in sub-Saharan Africa. Commercial farms operate as hubs at which small farmers can receive compensation, crop inputs, education and technical assistance for their harvests.

A second fund, pan-African firm Phatisa’s African Agricultural Fund, received a $100 million commitment to invest in commercial farms with expansion potential.

“It’s really a focus on developing assets that engage the local farmers,” Koh said.

OPIC also committed $248 million to funds focusing on Asia’s renewable energy and resource sectors. Paris-based Aloe Private Equity’s Aloe Environment Fund III received $136 million. Berkeley Energy Private Equity, a London-based firm focusing on Asia’s renewable energy sector, received $62 million for its Renewable Energy Asia Fund. Indochina Capital Corporation, a Vietnamese firm, received $50 million for its Mekong Renewable Resources fund.