A team of former Abraaj Group executives will return to market in the second half of this year with a third North African private equity fund, Private Equity International has learned.
Riyada Managers BV, which became independent from Abraaj in June last year, will seek around $300 million for RMBV Fund III, according to a source familiar with the matter. It will begin conversations with potential LPs in September.
The figure excludes co-investment capital, it is understood.
RMBV will deploy staff into Morocco after closing Fund III, the source added. It does not maintain an office there to reduce costs and the investment team are based out of Cairo and Tunis.
The firm declined to comment.
Existing LPs in RMBV’s funds include German investment firm DEG, the European Investment Bank and Swiss Investment Fund for Emerging Markets, according to PEI data. The UK’s CDC Group, French development agency Proparco and the International Finance Corporation have also previously invested, according to RMBV’s website.
The firm has made seven full or partial exits from the portfolio since the beginning of 2018, Ahmed Badreldin, former Abraaj partner and MENA head, told PEI in January. It manages one remaining asset in the a €115 million 2008-vintage Abraaj Kantara Fund and five in the $375 million 2013-vintage North Africa Fund II.
RMBV’s portfolio includes Egypt’s Cleopatra Hospital Group, Algerian logistics business La Flèche Bleue Algérienne and Tunisian diaper manufacturer Lilas, according to its website.
The 10-strong team, which has been together since 2011, is understood to have invested $750 million across 22 investments to date and has delivered an average 2x gross dollar return on realised exits.
Fund III will continue its predecessor’s strategy of targeting small and medium-sized companies in Morocco, Tunisia, Egypt and Algeria with aspirations to expand into sub-Saharan Africa.
North African states rely heavily on tourism and are expected to be severely hit by coronavirus, according to the Organisation for Economic Co-operation and Development. Tunisia could lose up to 400,000 travel-related jobs and in Egypt, where tourism contributes around 12 percent GDP, a slump in tourism revenues will account for two-thirds of total losses in GDP caused by the crisis.
RMBV is Netherlands-registered and had delegated the investment function to Abraaj prior to the latter’s collapse in 2018. Abraaj was considered one of the Middle East’s pre-eminent private equity firms until allegations emerged that senior figures had misappropriated funds.