Egyptian private equity fund LCP secures US$25m funding from IFC to support businesses

EGYPT — LCP Fund II, an Egyptian private equity fund that is managed by Lorax Partners, has secured a US$25 million investment from the IFC to help improve access to capital for SMEs in Egypt.

IFC, in a statement, said that its investment would be used to support the resilience of Egyptian businesses, help them grow and maintain or create new jobs at a time when the global economy is grappling with the challenges of COVID-19.

The LCP Fund targets to make growth equity investments in mid-cap companies in several sectors, including consumer goods and financial services.

It has a target of US$250 million of equity commitments, with a first close being completed in September this year.

LCP raised US$124 million in the September round which was led by the European Investment Bank (EIB).

During this round, EIB committed US$22 million in the LCP Fund II, money sourced from the Bank’s Economic Resilience Initiative Risk Capital Facility (ERI RCF), a facility that seeks to foster private sector development and job creation through investments in venture capital and private equity funds.

IFC says that the new fund will concentrate on companies seeking to expand geographically and those working on import substitution strategies.

It further noted that it plans to participate in future co-investment opportunities alongside Lorax Capital Partners.

“We expect IFC’s participation will help bring in more private capital into the Egyptian private equity market, increasing its competitiveness, diversifying the investor base, and ultimately improving access to capital for mid-cap Egyptian companies, which can become drivers of job creation and sustainable economic growth.”

Walid Labadi – IFC’s country manager for Egypt, Yemen and Libya

Globally, private equity has emerged as a critical source of financing, especially for mid-cap companies. 

It plays a critical role in development, helping to build the dynamic, job-creating companies that drive economic growth and provide essential goods and services.

In fiscal year 2020, which ended on June 30, IFC invested $57 million in private equity and venture capital funds to support businesses in the Middle East and North Africa.

Lorax Capital Partners (LCP), the manager of the LCP Fund II, is an Egypt-focused private equity firm currently managing the funds of the Egyptian American Enterprise Fund (EAEF).

The fund manager was responsible for its investments in Fawry for Banking and Payment Technology Services, the leading electronic payments platform in Egypt, and Sarwa Capital, a pioneer in consumer finance, leasing and securitization in Egypt.

LCP says it is very well positioned to serve as a ‘bridge’ between Egypt and global investors who are looking to generate attractive risk-adjusted returns while contributing to the economic development of the country.

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