Foursan nears halfway mark on $200m MENA fund

The Jordan-based firm launched its second fund at the start of 2007 but commitments stalled in the ‘dead’ fundraising environment.

Jordan-based Foursan Group will hold a first close on its second fund, growth investment-focused Foursan Capital Partners 1 (FCP), on $100 million on 1 January 2010.

FCP 1 has a target of $200 million, which it aims to reach by the close of 2010, once the fund has had a chance to start building a portfolio of investments.

The fund was launched at the beginning of 2007 as a follow-up to Foursan’s first private equity fund, which raised $50 million for investments in Jordan. However, as fundraising stalled for FCP 1, the firm subsequently broadened its mandate to focus on all of the Middle East and North Africa (MENA).

In the past 12 to 20 months there has been no movement on fundraising issues – it has literally been dead.

Nashat Masri

“In the past 12 to 20 months there has been no movement on fundraising issues – it has literally been dead,” Nashat Masri, a partner at Foursan, told PEI Asia in an interview. “In this region, only in the past couple of months has there been a little bit of movement.

“[Here] the economic issues have not been quite as severe as in other parts of the world, nonetheless Gulf investors were exposed globally and, as for everyone else, our risk premium went up.”

Limited partners  in the fund include the International Finance Corporation, which has committed the lesser of $20 million or 20 percent of the fund total; Jordanian government pension fund the Social Security Corporation; Saudi Arabian conglomerate Olayan Group; and the European Investment Bank, which has committed up to €10 million. In addition, the fund secured a $50 million senior term loan from the US Overseas Private Investment Corporation in 2007.

Masri described the investment pipeline for the fund, which is domiciled in the Cayman Islands, as good, “especially given the circumstances and general lack of capital for businesses”.

He added: “There’s a lot of shareholders hurting and some good stakes to be sold.”

FCP will typically seek to invest around $15 million per deal in sectors including financial services, food and beverage, education, aviation, pharmaceuticals and healthcare. It focuses on taking “significant” growth stakes in mid-sized companies and often invests alongside a strategic industry partner.

Foursan’s first fund was launched in 2003 as a joint venture with Deutsche Bank. It is fully invested and in the divestment stage.