|$60 million fund to focus on smaller businesses
|The Capital Trust Group (CTG), a multi-national private equity firm, announced the creation of the EuroMena fund on Friday at a ceremony attended by Lebanese Economic Minister Sami Haddad. The fund will invest in mid-cap private sector companies from across the MENA region, in industries with regional and international growth potential.
"The idea of the fund is to invest in countries that have signed EuroMed agreements and are in process of economic reforms," Bassam Aburdene, one of the fund's general partners, told reporters at the launch.
"We are interested in preparing companies that are already regional or have regional ambitions for foreign investment, either for acquisition or for an IPO," he said.
CTG first closed the EuroMena fund in February at a value of $60 million, and will aim to raise capital commitments of between $20 and $40 million by the second closing in June. The European Investment Bank (EIB) pledged $12 million to the fund, and CTG contributed $10 million, with the remaining investment coming from Europe and the Arab world.
Phillipe de Fontaine Vive, the vice president of EIB, noted the "tremendous growth rate" of MENA economies but said that there needs to be a regional initiative.
"By combining national companies from the same industry across the region, the fund will contribute to increased South-South integration in the region's manufacturing and services sector," said de Fontaine Vive.
The fund's Beirut manager, Romen Mathieu, said that the main obstacle for foreign direct investment in the region has come from the resistance of family-run companies to private equity. One of the main objectives of the fund is to transform small- to medium-sized enterprises (SMEs) into corporations by helping them conform to European market standards.
"There has been a global trend with SMEs," he said, "At some point you've got to take them public."
"Nobody thought this would happen in places like Saudi Arabia, but now you see second and third generations in family firms who realize they should retain 30 or 40 percent of shares, and take the rest public," Mathieu added.
The fund has identified four potential growth sectors for possible investment: banking- and insurance-sector services; industrial maintenance and services; pharmaceuticals, chemicals and cosmetics; and the production of food and beverages. Aburdene said that investment in real-estate, start-ups, and any "prohibitive sector in terms of common sense" is excluded.
"Hopefully (Europe and MENA) will be like Mexico and the U.S.," Aburdene said. "The U.S. invested in Mexico and now they have a market."
The Daily Star