The Overseas Private Investment Corporation, OPIC, has approved a total of $455 million in commitments to five private equity funds dedicated to investing in the MENA (Middle East and North Africa) region.
The move is part of OPIC’s response to president Obama’s pledge to the Muslim world during his June 2009 Cairo speech. The US President promised that the US would launch a fund to support technological development in Muslim-majority countries.
In October 2009 OPIC issued a call for proposals for its Global Technology and Innovation fund of funds. Five fund managers have been selected as recipients.
The two largest recipient funds are Riyada Enterprise’s Development Growth Capital Fund and Kuwait-based KIPCO Private Equity’s Opportunity Fund. Both are targeting $1 billion and received the largest amounts from OPIC, with $150 million dollars each. They will invest in growth stage companies and SMEs which stand to benefit from investment in technology and infrastructure.
Riyada Enterprise (formerly Riyada Ventures) is an SME-focused subsidiary of Abraaj Capital, which acquired it in 2009. Abraaj began its career investing in SMEs and was one of the first private equity firms in the region; its first fund closed on $116 million in 2003.
All five funds will invest throughout the region but two will focus mainly on portfolio companies in a particular country with potential for later regional expansion.
Cairo-headquartered private equity firm Citadel Capital’s Joint Investment Fund will focus mainly on Egyptian companies which it will then use as platform investments throughout the Middle East. Citadel received $100 million from OPIC and will invest in companies at various stages of growth in sectors such as waste management and alternative energy. Citadel was founded in 2004 and is targeting $500 million for the current fund.
The second country-focused fund, and concentrating on the Palestinian territories, is Siraj Fund Management’s Palestine Fund I. The Ramallah-based firm will invest in start-ups and SMEs which have the potential to become Palestinian market leaders and to expand further throughout the region. OPIC approved $30 million for the fund, which is targeting $80 million.
For the fifth fund, MENA venture capital pioneer AcceleratorTech, received $25 million from OPIC and is targeting $75 million, which it will invest in the new media sector throughout the region.
OPIC was established in 1971 to promote economic development in new and emerging markets and to help US businesses invest overseas.
In an October 2009 statement, The White House announced that The Global Technology and Innovation Fund is part of an ongoing US commitment to promote investment in sectors that will have a transformational effect in the region.