Graviton Capital will study the possibility of investing in small new and renewable energy projects in Egypt, according to Ayman Abou Hend, direct investment manager at Cartel Capital, the regional partner of Graviton.
Abou Hend explained that Graviton, a US company, will carry out investment studies before investing in order to understand Egypt’s monetary policy, the basis on which the direction of the dollar will be determined.
Graviton is launching a fund worth $500m and considering investment opportunities in renewable energy, according to Abou Hend, who said that $100m has already been pledged for the fund.
If Graviton decides to invest in Egypt’s renewable energy sector, the financing operation will cost $10m to $20m.
Abou Hend went on to explain that this value suits small- and medium-sized factories specialising in the production of batteries and solar panels.
Egypt aims to attract investments worth $10bn in the field of new and renewable energy by 2020, according to Mohamed El-Sobky, the executive chairman of the New and Renewable Energy Authority.
The Ministry of Electricity and Renewable Energy announced in 2014 that it aims to generate about 4,300 MW of renewable energy in two years. It developed a system that allows the private sector to establish new power plants and connect them to the national electricity grid with the goal of purchasing them according to a specific tariff.
On the other hand, Abou Hend said Graviton has developed a plan to implement acquisition deals in the real estate and agriculture sectors in Egypt before the end of 2015. However, due to reports of bribery in the Ministry of Agriculture last year, in addition to the lack of dollars and expectations of further decline in the value of the Egyptian pound, the firm decided not to implement the plan.
“It makes no sense to inject investments knowing that the dollar equals EGP 7.73, only to find out that the dollar price increased,” said Abou Hend. “This means there will be a decline in the company’s profits equivalent to the decline in the Egyptian pound’s value when the firm exits these investments and converts its sales to dollars.”
Abou Hend stressed that the clarity of Egypt’s monetary policy will determine future investment opportunities for the firm in Egypt.