The International Finance Corporation (IFC) is investing up to $20m in a newly independent private equity fund operating in the Middle East and North Africa (MENA) region. The investments by the IFC, a member of the World Bank Group, are to help small- and mid-cap MENA companies improve their access to institutional capital and boost their growth.
The fund, named SPE AIF I, is managed by SPE Capital Partners and will focus mainly on Egypt, Morocco, and Tunisia. Access to equity is especially constrained in these countries, because of macro-economic and political challenges.
Private equity has emerged as a critical source of equity financing for smaller cap companies globally. However, the penetration rate is just 0.02% in North Africa, compared to 0.11% in emerging markets, according to the Emerging Markets Private Equity Association data.
Nabil Triki, Managing Partner and CEO of SPE Capital, said, “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.”
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. They are also looking to help mobilie additional institutional capital in high growth sectors and ultimately strengthen capital markets.
Beatrice Maser, IFC’s Regional Director for MENA, said, “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.”
Maser added that greater access to such financing can help spur private sector development and job creation, which are both still much needed in the region.
In the fiscal year 2019/20, IFC has invested a total of $40.5m in private equity and venture capital funds to support businesses in MENA.