Lankan biz to soon gain greater access to US Govt. financing

Monday, 21 April 2014 01:00 -     - {{hitsCtrl.values.hits}}

  • Local bank to carry out due diligence selected for OPIC support
  • After the OPIC-AMCHAM agreement in 2011, hotel project to be managed by Marriot International received green light for a funding of $ 20 m
  • AMCHAM officials say 4 four more projects in pipeline
  • OPIC officials highlight lack of US partnerships as “big hurdle” for SL
By Shabiya Ali Ahlam Sri Lankan businesses will soon have greater access to Overseas Private Investment Corporation (OPIC) funding, with the American Chamber of Commerce in Sri Lanka (AMCHAM) selecting a leading local bank to carry out the due diligence process of proposed projects. The selection of the bank was after four months of intense search of an ideal partner to carry out the processes of due diligence and Know Your Customer (KYC). The identity of the bank will be made known after an official agreement is signed. OPIC is the USA Government’s development finance institution. It mobilizes private capital to help solve critical development challenges and works with the U.S. private sector. OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.         OPIC’s lending program in 2013 committed an unprecedented $3.75 billion in support of U.S. businesses investing in sustainable economic development in fast-growing markets and regions around the world. With a focus on low-income countries in Africa, Asia, the Middle East, and Latin America, the Agency supported a record volume of high-impact projects such as those in critical infrastructure, low-income housing, microfinance, small business lending, and agriculture. To date, OPIC has supported more than $200 billion of investment in over 4,000 projects. At a meeting facilitated by AMCHAM recently to discuss the opportunities for OPIC funding in Sri Lanka, AMCHAM Director Nimal Cooke said: “One thing that we have learnt is that we need a local banking partner to work with us. Depending on the OPIC to carry out due diligence and particularly the KYC is not going to happen. We identified that we need a bank and for that we have now found the bank and we believe that they are the best partner for us.” The meeting with the visiting OPIC officials and heads of local corporations was held to strengthen the position of the institution in Sri Lanka since, although the OPIC-AMCHAM relationship was established in 2011, only one project is currently under review while about four more are in the pipeline, according to AMCHAM officials. The first recipient is Weligama Hotel Properties Ltd., whose 200-room resort is managed by Marriot International. The project has received the green light for an OPIC funding of $ 20 million since with Marriot International involved in the hotel, it is certain the United States will benefit in some way. One key criterion to fulfil to be qualified for OPIC funding is to have the involvement of a US-based institution in the project. Highlighting why OPIC funding has not kicked off well in Sri Lanka, OPIC Director SME Finance Jamie Ekern pointed out that the “big hurdle” is finding the US partner. “We just don’t have a reach. It is just a functional set up. In terms of why we haven’t done more in Sri Lanka, I don’t think they have come across our plate. We are willing to do more in Sri Lanka. We welcome the peace here, the environment, and the business connection with the United States,” noted Ekern. OPIC mobilises private capital to help solve critical development challenges and in doing so, advances US foreign policy. Because OPIC works with the US private sector, it helps businesses in that country gain footholds in emerging markets, catalysing revenues, jobs and growth opportunities both at home and abroad. OPIC achieves its mission by providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds.