Private equity funds targeting emerging markets can now purchase political risk insurance arranged by the Overseas Private Investment Corporation (OPIC), a development finance institution backed by the US government.
OPIC will offer the insurance to funds responding to its search for emerging market debt specialists, of which $400 million in capital will eventually be committed. The group was not available for comment at press time to clarify if the insurance would eventually be offered to a wider group of emerging market GPs.
The new OPIC insurance facilities will provide “important protection for investors in challenging markets such as the Middle East and Africa”, said OPIC in a statement, adding political uncertainties can cast a shadow over the promising returns offered by developing economies.
The insurance offers protection against risks related to expropriation, currency inconvertibility, and political violence, among other types of coverage.
Insurance can be purchased for a fund’s full portfolio, specific investments, or for a select group of LPs. GPs also have the option of purchasing insurance directly through OPIC, or through an OPIC-sponsored private insurer.
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