IFC, a member of the World Bank Group, is investing up to US$20 million into a newly-independent, institutionalised private equity (PE) fund manager that will back Egyptian, Moroccan and Tunisian companies.
SPE AIF I, managed by SPE Capital Partners, is technically MENA-focused but will focus primarily on those three North African markets, where access to equity is especially constrained because of macro-economic and political challenges.
The fund’s goal is to help small and mid-cap companies in the region improve their access to institutional capital and boost growth. Though PE is considered 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.
“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 recognising the benefits of institutional ownership and professional management,” said Nabil Triki, managing partner and chief executive officer (CEO) of SPE Capital.
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 mobilise 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.”