IFC to invest €10m in North African SME fund

The International Finance Corporation (IFC), member of the World Bank Group, has pledged to invest € 10million (US$ 13million) in a fund dedicated to helping small and medium enterprises (SMEs) in North Africa.

The Capital North Africa Venture Fund II (CNAV Fund II), managed by Morocco-based Capital Invest, will use the equity investment to help invest in SMEs across North Africa, particularly medium-sized companies who can demonstrate growth potential.

Launched in 2006, the fund also has the mandate to pursue opportunistic investments into West Africa and Egypt.

“Supporting small and medium businesses will positively contribute to the economic growth and stability of the region, as SMEs have strong growth potential that, when realized, will attract more investors,” said Omar Chikhaoui from Capital Invest.

A total of € 75million (US$ 98million) has already been committed to the fund, which has a maximum total of € 100million (US$ 131million).

According to a number of studies, SMEs in the Mena region suffer a funding shortfall estimated at around US$ 150billion and the unemployment rate is the highest in the world.

“Investment funds, with their unique provision of both equity capital and expertise, have a significant impact on company growth and job creation,” said Joumana Cobein, IFC Principal Country Officer in Morocco.

“Unemployment is a huge challenge for North Africa, and supporting funds can help address this challenge.”

The fund’s strategy is to target high growth companies, which will make a positive contribution to job creation and economic growth.

The IFC will be working closely with the fund manager to ensure the fund’s structure and terms are in line with IFC and international standards to ensure investor protection is adequate.

“Investment into African private equity funds has been rising throughout the decade and indicates the strong interest from international investors due to the continent’s fast growing economies,” said Imara in an update to investors.

“We see the latest investment by the IFC as a further vote of confidence in Africa’s Private Equity Industry and it will go a long way to encourage further economic growth and development in Africa.”

Gulf Capital secures anchor investment of $20m from IFC

Gulf Capital has received an anchor investment of $20m from the International Finance Corporation (IFC) into its Gulf Capital Credit Opportunities Fund.

The new investment brings the fund’s AUM to $215m, positioning it as the largest credit fund in the Middle East, and marks the third close of the fund.

The Gulf Credit Opportunities Fund, which is managed by a branch of Gulf Capital, Gulf Credit Partners, plans to reach an AUM of $250m by the end of 2013 and to contribute to sustainable economic growth by lending to companies in various sectors including infrastructure, manufacturing, education and healthcare.

The fund, which was launched in late 2011 - with its first close in July 2012 with $150m - plans to target returns from 15-20% on a total return basis, with a cash return of around 10%.

The well-established fund has already attracted a number of investors from the region, but managers of the fund are expecting to attract a host of new investors from other markets, particularly from Europe and Asia, as a result of the investment from IFC.

The agreement with the IFC will help to provide long-term financing to small and medium enterprises in Turkey and the Middle East and North Africa region, expanding access to finance, as well as creating jobs.

This new investment builds on a long-standing relationship between IFC and Gulf Capital. The two have co-invested in companies across Mena since 2008, including Metito, a global water utility company, and SES Power, a mobile power provider.

“It is a great advantage to have the IFC on board because the organisation looks at investing in funds on a global basis,” Walid Cherif, managing director for Gulf Credit Partners told Mena Fund Manager. “Making that selection is very important to us so it really takes us to a high standard in terms of governance and criteria.

“We are looking to attract a number of international investors in the European and Asia,” he added. “Typically, because of the sophistication of the product we have, we usually attract institutional investors and sophisticated family offices. We already have a number of those from the Middle East and we are hoping to extend that to Europe and Asia.”

K Aftab Ahmed, IFC Director for Financial Markets and Private Equity Funds, for Europe, Central Asia, the Middle East and North Africa, said: “More than half of small and medium businesses in the Middle East and North Africa don’t have access to credit.

“IFC’s investment in Gulf Credit will facilitate the availability of much-needed mezzanine financing in the region to businesses. Investments such as these can help accelerate growth and strengthen good governance,” he continued.