Beltone launches Egypt, Gulf MidCap fund.

CAIRO: Beltone Private Equity launched a $200 million fund to invest in small and medium enterprises (SMEs) in Egypt and the Gulf .

This will include a $10 million Egypt Sub-Fund financed by the World Bank's International Financial Corporation (IFC) and the European Investment Bank (EIB), both of which will commit $16.5 million. The Export Development Bank of Egypt will commit $10 million, a Beltone official said in a conference Wednesday.

Beltone's MidCap fund will invest in minority and some majority stakes in firms with revenues of $5 million to $50 million, reported Reuters.

"The fund will invest in between 25 percent to 40 percent of these SMEs' capital so they can expand and grow," said Abdel-Monem Omran, Beltone Private Equity's chief investment officer.

While they will not interfere in the management or strategies of these companies, the fund will help them network with international partners to determine potential markets, he added.

Beltone entered into a joint venture with SIGEFI Private Equity, which is part of Siparex Group in France, to work on the fund.

Siparex has been involved in similar funds in Tunisia and Morocco since 1992.

Paul Tholly, managing partner of SIGEFI, said, "We started in Tunisia and Morocco as the closest countries to France. Now with the Euro-Mediterranean partnership the way is paved for this expansion in Egypt and the Gulf. We needed a reliable partner [locally], which we found in Beltone."

The global economic crisis has not deterred international financial institutions to invest in developing markets. "It been three days in Cairo for me, but I can see the potential here " said Haydee Celaya, IFC director of private equity funds.

"One of the goals of being partnered in the fund is to demonstrate to other national and international institutions that the opportunities exist here," she added. "Private equity funds play an important role in supporting companies in the emerging markets, which in turn helps spur economic growth."

The MidCap Fund will eye the textile, agriculture and packaging sectors, according to Omran.Aa

The fund managers will also look at potential companies' profitability or turnover as well as the management.

With $40 million already in the bag, Beltone's MidCap Fund will approach other banking institutions in Egypt and the Gulf to raise the remaining amount.

Omran said Egypt's financial system was not facing a liquidity crunch and had attractions to investors such as proximity to European markets.

"Now that doesn't mean that things will not be affected... Since we are a long term investor, we are looking three or five years down the line, not today, so we believe that yes there are opportunities," he said. --Additional reporting by Reuters.

Daily NewsEgypt 2009

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