EBRD to invest up to $50 million in Egypt-focused private equity fund

the European Bank for Reconstruction and Development (EBRD) plans to invest in a fund dedicated to SMEs by Lorax Capital Partners, a homegrown investment firm.
EBRD to invest up to $50 million in Egypt-focused private equity fund
Around 5.8 million Egyptians work in the small and medium-sized enterprises sector. Source: Egypt Independent

In its efforts to boost the resilience of the financial sector in Egypt and supporting equity financing to small and medium-sized enterprises (SMEs), the European Bank for Reconstruction and Development (EBRD) plans to invest up to $50 million in a fund dedicated to SMEs by Lorax Capital Partners (LCP).

Incorporated in 2015, Lorax Capital Partners is an Egypt-focused private equity firm with approximately US$ 200 million of committed capital under management allocated primarily from the Egyptian American Enterprise Fund. LCP positions itself as the ‘bridge’ between Egypt and global investors (in this case EBRD) that are looking to generate attractive risk-adjusted returns while contributing to the economic development of the country.

Equity fundraising is facing extremely challenging times in the southern and eastern Mediterranean (SEMED) region due to the COVID-19 pandemic. Small companies are facing a decrease in their activity and liquidity shortages. The EBRD’s commitment to LCP Fund II helps to bring a SEMED fund to fruition during the crisis.

“We are thrilled to support a local and independent team such as Lorax. The EBRD’s investment in LCP Fund II helps to contribute to the development of private equity in Egypt and will help to provide long-term capital growth to small and medium-sized companies in the region.”

Anne Fossemalle, Director and Head of the Equity Funds team, EBRD

Around 5.8 million Egyptians work in the small and medium-sized enterprises sector, representing about 43.1% of the total number of workers in the official sector.

With the support of the EBRD, the fund held a first closing of $142 million in September 2020, launching its first traditional private equity fund. The Fund is targeting total commitments of $250 million. This investment marks the EBRD’s second investment into an Egypt-focused private equity fund, with the first being Ezdehar Egypt Mid-Cap Fund in 2016.

Egypt is a founding member of the EBRD. Since the start of its operations there in 2012, the EBRD has invested over €6.8 billion ($7.9 billion) in 123 projects in the country.

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