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OPIC will expand investor support in Ukraine

On his first official visit as OPIC President and CEO, Ray Washburne reiterated the Agency’s commitment to Ukraine, a country where OPIC has quadrupled its investment in recent years

An obscure U.S. government agency will invest $17.8 million in two Ukrainian banks, the group’s chief announced during a visit to Kyiv this week.

Ray Washburne, a Dallas-born Republican fundraiser who was confirmed to lead the agency, visited Kyiv to announce the deals and meet with local officials and businesspeople.

Washburne is the new chief of the Overseas Private Investment Corporation, a self-sustaining U.S. government organization that finances projects around the world in a bid to prime the pump for American private sector investment and further Washington’s foreign policy goals.

“The pipeline looks good as long as reform continues,” he told in interview, noting that OPIC has already invested $522 million in Ukraine. “Where it goes amount-wise, I don’t know, but I’ll say that we’re actively looking at many deals.”

The organization has $21 billion in the bank to loan around the world, and is authorized to go up to $29 billion.

“This is not an aid program,” Washburne said. “These are legitimate businesses and we get paid back.”

Art of the deal

Washburne was originally scheduled to travel to Ukraine with U. S. Energy Secretary Rick Perry, who postponed his trip to November at the last minute due to the flooding in Texas.

His visit to Ukraine was part of his first trip abroad as OPIC president, coming after a one-day sojourn to Kazakhstan.

“I met with the prime minister (Volodymyr Groisman) and several cabinet members,” he said. Other meetings included a session with Naftogaz chief Andriy Kobolev, Health Minister Ulana Suprun, Finance Minister Oleksandr Danilyuk, the U.S.-Ukraine Business Council and the American Chamber of Commerce.

The OPIC chief did not come empty-handed.

During the trip, he signed deals with two Ukrainian banks providing a total of $17.8 million in support.

The first deal — with Agroprosperis Bank — envisions a $10 million program to provide credit to small and medium-sized farmers in Ukraine.

The second deal is with Bank Vostok, a subsidiary of Volodymyr Kostelman’s Fozzy Group. That agreement is also focused on smaller businesses, giving the lender $7.8 million to expand its credit portfolio to rural businesses.

“I came to Ukraine to show that we’re committed to the country,” Washburne said. “We’ve got a full pipeline of deals that we’re looking at in everything from health to oil to gas to small business lending.”

Other proposals came up at the U.S.-Ukraine Business Council meeting. One potential investment would see a 100-bed hospital get built in Ukraine, in part for Ukrainian surrogate mothers. Washburne’s delegation declined to comment on that proposal.

The possibilities for political risk insurance — whereby OPIC underwrites the risks that U.S. investors take in situations that the private sector will not insure — also remain large. Citibank, for example, had $50 million in loans to Astarta and Kernel partly guaranteed by OPIC in 2011.

The long-discussed Yuzivska shale gas field in Donetsk Oblast continues to lie dormant after Anglo-Dutch Shell pulled out following the Russian-backed separatist capture of Sloviansk in 2014, located at the center of the gas field.

But should an American firm be interested in developing the deposit, which lies kilometers from the front line in some cases, OPIC would be there.

“If it’s a U.S. company, we would consider supporting them,” said John Didiuk, the organization’s international project finance director.

OPIC President and CEO Ray Washburn (Ukraine)

Winding down?

Washburne added that business leaders had come to him with a list of complaints familiar to followers of the country’s economic scene.

“The needs are longer-term debt, longer than five years,” he said. “A lot of banks here don’t want to go longer-term.”

In terms of longer term projects, Washburne said that the country “had been a good place to invest,” but that he did not talk to members of the U.S. business community interested in investing in Ukraine before departing.

“I think the confidence level with Trump’s election has gone way up so that we’re gonna be very active,” he said.

But Washburne finds himself in an odd position as the agency’s president.

U. S. President Donald J. Trump’s 2018 budget proposal asked the U. S. Congress to end OPIC, requesting $61 million in “wind-down costs.” The budget requests referred to the group’s activity as “unnecessary interventions that distort the free market.”

After his confirmation hearing, the far-right Heritage Foundation think tank published an article asking “why, exactly, would a nominee fail to support the policy objective of the president who appointed him?”

But Washburne downplayed the issue, saying he wasn’t “a wind-down artist.”

“When the original budget came out, a lot of things were being cut — multiple agencies,” he said. “I’m a builder, not a wind-down guy.”

This story has been updated to reflect that Citibank worked with OPIC on a lending program in 2011. 

OPIC’s investments in Ukraine

  • Naftogaz (2017) – $400,000,000
  • Dragon Capital New Ukraine Fund (2017) – $25,000,000
  • Horizon Capital Emerging Europe Growth Fund III (2017) – $37,500,000
  • East Europe Foundation (2016) – $517,500
  • PJSC Megabank (2015) – $9,750,000
  • Citibank (2014) – $50,000,000
  • Atlantic Group Limited (2013) – $3,900,000
  • Winner Imports (2012) – $20,000,000
  • SigmaBleyzer (2011)  – $50,000,000
  • Degress Holding Limited (2010) – $9,750,000
  • Amsted-Rail (2010) – $4,500,000
  • Chemonics International (2010) – $470,715
  • Atlantic Group Limited (2006) – $8,385,000
  • Transnational Resource (2004) – $9,000,000

Source: Kyivpost

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