America’s $205 Billion Government Fund You’ve Never Heard Of | Conor Coleman, Head of Investments at Development Finance Corporation (DFC)

**Jack Farley** (0:00)
Today's episode is brought to you by the Teucrium Corn Fund, ticker CORN. Let's get into it. There's a very, very large player in global finance that almost no one knows about, the Development Finance Corporation. It just had its reauthorization from $60 billion to $205 billion. A lot of people talk about BlackRock, Federal Reserve. And yes, the numbers there are very large as well.
But a lot of that activity is moving from bank reserves to Treasury bills or not something that's a real risk transformation. Whereas here we're talking about an entity that is investing substantial sums in large risky projects such as Ukraine, the Strait of Hormuz. We'll get all into that. But please, I hope you enjoy this conversation with Conor Coleman of the Development Finance Corporation. Got a very special conversation. I'm joined by Conor Coleman, Chief of Staff and Head of Investments at the Development Finance Corporation. Conor, welcome to Monetary Matters. Good to see you.

**Conor Coleman** (0:58)
Jack, thank you so much for having me on today.

**Jack Farley** (1:00)
I think it's really important, Conor, because the DFC, Development Finance Corporation, does so much in finance, and many people are familiar with the heavyweights, the Federal Reserve, BlackRock. But I think very few people, even who work in the investment business, know about the DFC. So first off, my first question, what is the Development Finance Corporation?

**Conor Coleman** (1:22)
I think that's such a good point. Frankly, I had been in the private sector my entire career before I took this opportunity, and I did not even hear about the DFC until Ben got the call from the president. By way of background, the DFC is the international investment arm of the United States government and a central player to economic state craft for the United States.
We look to drive private capital mobilization through our investment strategy, which is both strategic investments and investments that drive economic development. Our goal is to make a return for the United States taxpayer, drive US foreign policy initiatives, and achieve economic development and create economic ecosystem in our partner nations.

**Jack Farley** (2:04)
Just to give people a scale, the previous amount of money that the Development Finance Corporation could invest was $60 billion. That just got raised to $205 billion.
What are the rough asset classes that the Overseas Investment Authority of the United States government is investing in? Can they be categorized as loans, as private equity, public stocks? What are we talking about here?

**Conor Coleman** (2:29)
Under Ben's leadership, we're really expanding our toolkit in order to effectuate the mission. Historically speaking, dating back to our predecessor agency, OPIC, and during the first couple of years of the DFC until we were reauthorized, we focused on investing through three main asset classes. One is senior secure project finance lending, which is just senior secure loans.
The second is offer providers of political risk insurance or guarantee products. The third is what I call intermediary investing, which is us being a traditional LPN funds or lending into regional banks who then in turn lend to a country. I would say under Ben's leadership and after the reauthorization, our toolkits been expanded. You're going to start seeing us playing much more in equity investment, both common equity and structured equity. You're going to see us utilizing the full suite of our loan products. So not just senior secured, but also mezzanine and structured notes.
Definitely going to still be providers of political risk insurance and guarantee products. But I think expanding on those capabilities and really trying to utilize them in new and creative ways. You're already starting to see us doing that with the maritime insurance product for the Strait of Hormuz with our insurance. So I think the name of the game right now in this new DFC is being more creative, acting more like a traditional Wall Street finance institution across the board.

**Jack Farley** (3:57)
You talk about the Chief Executive Officer of the DFC, Ben Black. Just to give people a sense that when people hear the Ukraine minerals deal that President Trump did, that was through the DFC. When people talk about the Strait of Hormuz re-insurance program, that was through the DFC. So I want to get into those specific deals. Maybe let's start with the re-insurance program. What is the goal of that deal? How did it meet the objectives of the DFC and how's it going?

**Conor Coleman** (4:26)
I would say the maritime insurance product and just the way we structured the investment and how quickly it came to fruition is really a great case study of how we're going to be acting with the new DFC going forward. So as you probably saw in the President's True Social, he tasked the DFC to partner with the US military to create a product that offered the ability to restart maritime commerce in the Gulf. So when we looked into that initiative and really what it took to restart maritime commerce, it was two things. One, it was financial stability, because as you saw the market kind of pulled back of offering war risk insurance during that time. And then secondarily, it was operational security, because when we looked into what was going on in the Gulf, we realized that the captain of the ship is the sole person that can decide if a ship is going to sail or not. It's not the owner of the ship, it's not the company that leased the ship to move its cargo. The captain has full discretion over the ship and the safety of its crew.