IFC, a member of the World Bank Group, is investing up to US$20mn into a newly independent, institutionalized private equity fund manager operating in MENA, to help small and mid-cap companies in the region improve their access to institutional capital and boost growth.
The Fund, SPE AIF I is managed by SPE Capital Partners and will focus mainly on Egypt, Morocco and Tunisia, where access to equity is especially constrained because of the macro-economic and political challenges. While private equity has emerged as a critical source of equity financing for smaller cap companies globally, the penetration rate is just 0.02 percent in North Africa, compared to 0.11 percent in emerging markets, according to EMPEA EMPEA, data as of September 2018. data.
Nabil Triki, Managing Partner and CEO of SPE Capital said: “With IFC’s support, we hope to not only provide growth capital, but also industry and value-creation expertise, which are all currently limited in MENA with focus on North Africa. There is growing demand for such support because businesses are increasingly recognizing the benefits of institutional ownership and professional management.”
The investment is part of IFC’s strategy to partner with selected fund managers in key regions to meet the needs of fast-growing companies, to help mobilize additional institutional capital in high growth sectors and ultimately strengthen capital markets.
“By backing an experienced fund manager focused on the MENA market, IFC’s support will help signal the continued viability of private equity in the region,” said Beatrice Maser, IFC’s Regional Director for MENA. “Greater access to such financing can help spur private sector development and job creation, which are both still much needed in the region.”
Lack of risk capital hinders economic growth and thwarts entrepreneurship across MENA. By providing capital private equity and venture capital can play a critical role in development, helping to build the dynamic, job-creating companies that drive prosperity, provide essential goods and services, and strengthen the middle class. In FY20, IFC has invested a total of US$40.5mn in private equity and venture capital funds to support businesses in MENA.
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