Crowell & Moring’s office has concluded the establishment of a direct investment fund using the offshore system in Luxembourg in favour of Egyptian investors, with the aim of investing in small- and medium-sized enterprises (SMEs) in the local market, said Walid Hegazy, founding partner of Hegazy & Co. which is affiliated with the office.
Hegazy’s office played the role of legal adviser in the process of establishing the fund with a capital of $25m. The fund will be managed by a financial company located in Dubai.
Direct investment funds collect money from investors with the goal of buying shares in companies and keeping them for a long period of time, up to five years. They aim to enhance the company’s revenues and increase their value, then sell them and achieve capital profits from the difference between the purchase and selling value of shares owned by the fund in the companies.
The fund aims to reach an average financing value, offered to each targeted company, of about $2m, in a way that suits the SMEs segment which represents about 80% of the Egyptian economy.
The SMEs segment is characterised by fast growth, Hegazy said. The segment’s annual growth rate ranges between 20% to 25%, especially with the availability of financing as well as an administrative and marketing strategy that suits the developments of the market.