The European Investment Bank (EIB) has signed a commitment of $22 million with LCP FUND II COÖPERATF U.A., a private equity fund that primarily targets growth capital investments in small and medium-sized enterprises and mid-market companies in Egypt.
The European Bank for Reconstruction and Development (EBRD) also announced on Thursday it will invest $50 million in the same fund.
At the first closing in September, the fund attracted $140 million in commitments from the EBRD, the International Finance Corporation (IFC), Proparco (a development financial institution owned by the French development agency and private shareholders from the developed countries and developing countries) and the Egyptian American Enterprise Fund, the EIB said in a statement.
It added that the fund manager, LCP FUND MANAGER BV, will adopt a hands-on value-adding investment strategy and will seek to invest in enterprises with robust growth potential in important economic sectors, including education, health care, manufacturing, and services.
The fund seeks to contribute to the development of the private sector in Egypt by increasing access to capital for domestic SMEs and mid-market companies and supporting their growth and continued institutionalisation.
In addition, the fund’s portfolio companies are anticipated to contribute to robust job creation, according to the statement.
The EIB’s action comes in the framework of its Economic Resilience Initiative Risk Capital Facility (ERI RCF) and seeks to foster private sector development and job creation through investments in venture capital and private equity funds, according to the statement.
Additionally, it blends EIB’s own resources with donors’ resources to unlock more opportunities for the private sector in the southern Mediterranean region.
The EBRD said in a statement on Thursday that the fund is targeting total commitments of $250 million.
The EIB is the long-term lending institution of the European Union and aims to make long-term finance available for sound investment in order to contribute towards EU policy goals.
The Risk Capital Facility for the Southern Neighbourhood countries, which include Algeria, Morocco, Tunisia, Egypt, Jordan, Lebanon, Syria and the West Bank and Gaza, was set up by the European Commission and the EIB and provides access to equity and debt financing to SMEs in the Mediterranean region in order to support private sector development, inclusive growth and private sector job creation.
The main activities of the facility include investing in private equity funds, investing in and lending to microfinance institutions and microfinance investment vehicles, and providing technical assistance to financial intermediaries (private equity funds, microfinance institutions, microfinance investment vehicles, banks and other financial institutions) or final beneficiaries.