CAIRO: While it is billion-dollar deals that have garnered private equity managers their reputations as masters of the universe, not all of them are thinking quite so large.
Sphinx Private Equity Management, a subsidiary of private equity firm Citadel Capital, announced Monday that they will launch a $100 million fund targeting troubled small and medium-size companies.
Citadel is investing $10 million in the new Sphinx fund. The Swiss Investment Fund for Emerging Markets is planning to commit $7.5 million, while the European Investment Bank and the International Finance Corporation, a branch of the World Bank Group, will invest $17 million each.
The idea is to invest in “Egypt-based small and medium-sized enterprises that are distressed, in default, or in need of restructuring, the company said in a statement. These investments will range between $5 million and $15 million and will last three to five years.
Sphinx, which currently holds $230 million in managed assets, is preparing seven deals in the areas of pharmaceuticals, textiles, cosmetics, logistics, food processing, specialty glass and automotive assembly. The company expects to complete its first transaction within six months, said Marianne Ghali, the company’s managing director.
Additionally, the firm will not leverage their transactions, as is common with large private equity companies.
“The fact that we’re able to close on this fund now, amid such turbulent economic conditions, is a clear indication that institutional investors continue to view Egypt as an attractive investment opportunity, said Ghali in a statement.
The fund will be important in preserving jobs and paying off loans that might otherwise default, said Hisham El Khazindar, managing director of Citadel Capital. “Even though Egypt is relatively unharmed [by the economic crisis], we will have some companies facing difficulties, he said.
Citadel Capital has emerged as one of the largest and most consistently successful private equity firms in the region since its founding in 2004. Its managed assets have risen to $8.3 billion over that period and include holdings in energy, agriculture, media and river transport.
“We like like-minded institutions, like-minded investors, or like-minded individuals, Ghali said of the fund’s investors.