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U.S. International Development Finance Corporation (DFC) (US DFC)

Key facts

  • Established in 2019
  • Ownership: Public

Latest update: 03/12/2021

Products

  • Loans
  • Debt financing
  • Political risk insurance
  • Equity investments
  • Technical assistance and feasibility studies
  • Investment funds


Debt financing


  • DFC provides medium- to long-term debt financing through loans and guaranties
  • Management of the borrower must have record of success in their field
  • DFC provides financing of more than USD 50 million (up to USD 1 billion) to projects in critical infrastructure, energy, and other projects requiring large investments.
  • DFC’s Mission Transaction Unit (MTU) works with USAID to identify access to finance challenges in developing countries and partners with local, regional, and international financial institutions and businesses to mobilize private investment to advance DFC’s and USAID’s development objectives. MTU can support transactions with all of DFC’s investment tools.
  • DFC’s Mission Transaction Unit (MTU) works with USAID to identify access to finance challenges in developing countries and partners with local, regional, and international financial institutions and businesses to mobilize private investment to advance DFC’s and USAID’s development objectives. MTU can support transactions with all of DFC’s investment tools.
  • Fees:
    - Upfront retainer fee: Covers due diligence costs such as travel to the project site
    - Facility/origination fee: A one-time, flat fee usually paid at the time of loan agreement signing or first disbursement
    - Commitment fee: An annual percentage charged on any undisbursed amount
    - Interest rate: A negotiated spread over the base-cost of funds    
    - Maintenance fee: An annual fee charged to cover the cost of monitoring the loan
    - Other: The cost of the services of outside consultants or attorneys that may be required by OPIC; the funding costs associated with how the project is funded, either through the U.S. Department of Treasury or via OPIC’s Capital Markets program; and any expenses related to registration or notarization of documents, etc.

Political Risk Insurance


  • Provides coverage of 90%–100% for up to 20 years for equity investments, loans, capital markets transactions, and other contracts
  • Insurance is provided to U.S. investors, contractors, exporters, and financial institutions
  • Coverage of up to $1 billion against losses due to currency inconvertibility, government interference, and political violence including terrorism.
  • DFC also offers reinsurance to increase underwriting capacity.
    Types of coverage:
    - Currency inconvertibility
    - Expropriation
    - Bid, performance, advance payment, and other guarantee coverages
    - Political violence
    - Reinsurance
    - Breach of contract for capital markets

Equity Investments


  • DFC can provide direct equity investments into companies or projects in the developing world which will have developmental impact or advance U.S. foreign policy. 
  • In most cases, grants for feasibility studies and technical assistance will be designed to increase the developmental impact or improve the commercial sustainability of a project that has received, or may receive, DFC financing or insurance support.


Technical Assistance and Feasibility Studies


  • In most cases, grants for feasibility studies and technical assistance will be designed to increase the developmental impact or improve the commercial sustainability of a project that has received, or may receive, DFC financing or insurance support.
  • The program provides technical assistance for certain development credit activities requested by other agencies by utilizing a competitively selected pool of contractors.
  • DFC determines the technical assistance, feasibility study, or training work to be provided, and the grant recipient selects an entity with relevant expertise and experience that will perform that work.
  • A current or potential DFC client that has submitted an application for DFC financing or insurance support can inform DFC of the client’s interest in the program at or following the time of submission of that application.


Investment Funds

  • DFC can invest debt and equity into emerging market private equity funds to help address the shortfall of private equity capital in developing countries and help these economies access long-term growth capital, management skills, and financial expertise
  • DFC mobilizes private capital for direct equity investments by qualified fund managers in private companies in developing countries and emerging markets
    - DFC provides debt to private equity funds
    - It typically provides up to a third of a fund’s total capital
    - The loan is usually structured as a zero-coupon loan
    - DFC uses an open, competitive process for selecting fund managers
  • On April 20, 2021 DFC opened a Call for Applications from private equity, growth capital, and venture fund managers seeking DFC financing for funds with strategies of targeting investments in DFC-eligible countries that address climate mitigation, adaptation and/or resilience. Applications will be evaluated on a rolling basis.
  • Evaluation of prospective fund managers considers the following criteria:
    - How the proposed fund and its investments may have a positive developmental impact on the host country/countries
    - Ability of the fund manager to comply with DFC’s policies related to environmental and social sustainability as well as respect for human and worker rights
    - Relevant track record of the prospective management team making long-term risk investments in emerging markets, and the team's country or regional experience
    - Experience, depth, credibility, and cohesiveness of the fund management team and its experience managing third party capital
    - Viability and thoughtfulness of the proposal; consistency and clarity of the investment thesis, value creation strategy, and proposed exit strategies
    - Ability of the fund manager to raise sufficient equity capital to close the proposed fund in a reasonable amount of time














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