Private Equity Begins To Re-Awaken In Egypt

Tens of thousands of peaceful protesters flooded Tahrir Square in central Cairo on Friday calling in ever louder voices for President Hosni Mubarak to leave office.

So what’s a private equity fund manager to do? Up to now, the answer was close the office door.

In a statement Reuters reported on Thursday, the Egyptian firm Citadel Capital said it would resume full operations on Sunday. Citadel believes the “difficult period will result in a more stable and faster growing Egypt and region,” the firm said.

This is good news for African investing. Since 2004, Egyptian government-sponsored reforms have made the country a more investment friendly place, and Egypt has become a hub of activity in the continent’s north. A return to normalcy is a welcome event for the region.

This is particularly true given the extent of PE activity in Egypt. I ran across a Preqin report on Friday that details just how ii is going there and I was surprised. Here are its findings.

There are 11 private equity firms with headquarters in Egypt, six with secondary offices and 18 others that invest.

Fourteen funds are presently in the market raising new money, the largest of which is a 1 billion Euro fund managed by InfraMed Infrastructure. Not far behind are EFG-Hermes Egypt Infrstructure Fund, targeting $600 million, and Invest AD MENA Partners II, at $400 million.

Like elsewhere, fundraising has fallen off since the start of the global financial crisis. But in the three years prior (2006, 2007 and 2008) 20 funds closed on $5.4 billion.

The largest fund presently operating is Citadel Capital’s $1.37 billion SPV Fund III, raised in 2006. Next on the list is Swicorp Joussour Company’s $1 billion 2008 fund.

Egypt is going through a broad political awakening with its people finally demanding democracy from their leaders. Happily, there is private equity (including a new venture firm called Sawari Ventures) to support whatever new system evolves.

While it finally appears fund managers are getting back to work, the days ahead will be filled with uncertainty.