In the world of alternative assets, it's a rare feat to have a personal relationship extend from friends at the same business school to managing partners at the same private equity firm.
For former Goldman Sachs bankers Kashif Siddiqui and Hazem Shawki, the tale is all the more unlikely considering the considerable mileage they have racked up along the way – from their birthplace in Pakistan and Egypt, respectively, to MBAs from McGill University in Montreal, to investment bankers at the financial giant's New York headquarters.
Now the pair, along with fellow Goldman alum Walid Zein, have taken root in Dubai as managing partners in Egyptian investment bank EFG-Hermes' private equity wing.
“We all agreed that there are very exciting opportunities for private equity as an asset class in the region,” says Siddiqui, who worked with Shawki and Zein for six years at Goldman. “And the question became what is the best avenue in order to be effective in that field.”
The trio will assist 10-year old EFG-Hermes Private Equity in investing its third Middle East and North Africa (MENA) fund, which closed on $580 million last year. That fund is roughly 45 percent invested, according to Siddiqui.
The new recruits also have plans to expand EFG-Hermes' primarily Egypt-focused investment strategy to other countries in the region in which the investment bank has a well-established presence – a strategic move the unit has been gradually implementing.
“One of the key things we're going to focus on is to accelerate that rollout regionally in terms of the investments that we do and the region being defined as MENA,” says Siddiqui. He has already identified Saudi Arabia and the United Arab Emirates as two logical destinations for expansion, given EFG-Hermes' solid footprint in those countries.
The firm has also begun the process of hiring new investment professionals for its Cairo and Dubai offices.
“We're certainly actively looking to expand the team. Given the broader focus we're going to need more people,” says Siddiqui.
IFC BACKS FRANCOPHONEFOCUSSED VEHICLE
The International Finance Corporation (IFC), a unit of the World Bank Group, has provided a $15 million (€9.6 million) anchor investment for African private equity fund Atlantic Coast Regional Fund, which has held a first close on $75 million. The fund is targeting $150 million.“ There are very few private equity funds of institutional quality fundraising for Africa and there are even less funds trying to target the francophone zone,” said Sergio Pombo, an investment officer in IFC's private equity and investment funds department. The Dakar, Senegal-based fund is the first private equity fund managed by local professionals with a primary focus on francophone Africa, according to the IFC. The chief executive is Papa Ndiaye, previously founder and chief executive of Advanced Finance and Investment Group, a Johannesburg-based private equity fund management company. The Atlantic Coast Regional Fund will invest approximately one-third of its capital in small- and medium-sized enterprises (SMEs), with the remainder invested in mid-cap companies. The geographic scope of the fund includes the approximately 10 African francophone countries as well a handful of additional countries including Nigeria and Ghana.
SIX NEW FUND COMMITMENTS FOR CDC
CDC Group, the UK government-backed private equity emerging markets fund of funds investor, has made commitments totalling $149.8 million (€95.5 million) to six private equity funds in Africa. It has committed: $30 million to GroFin Africa Fund, which provides expansion capital of between $100,000 and $1 million to small enterprises in sub-Saharan Africa; $30 million to Travant Private Equity Fund I, a generalist fund investing between $20 million and $40 million in growth companies in West and Central Africa, with a primary focus on Nigeria; $20 million to The Capital Alliance Property Investment Company, which invests in greenfield developments including residential, commercial and retail properties, primarily in Nigeria; $31 million to SGAM Al Kantara Fund, which provides expansion capital and LBO investments of $8 million to $25 million for mid-market companies, primarily in Morocco, Tunisia, Algeria and Egypt; $31 million to Tuninvest's Maghreb Private Equity Fund II, a North African fund investing in SMEs in Morocco, Tunisia and Algeria; and $7.8million to the Central Africa Growth Sicar fund, a private equity fund investing in SMEs in Central Africa which is managed by EMP Central Africa Management, a subsidiary of EMP Africa.
ECP GOES SALT MINING
Africa-focussed private equity firm Emerging Capital Partners (ECP) has purchased a $30 million (€19 million) controlling stake in a salt production and export company based in the small East African nation of Djibouti. The company, Salt Investment, will use the fresh capital for buying production equipment and constructing or renovating storage units, shipping platforms, housing sites and other facilities, according to a statement released by ECP. The investment was made through a Mauritius special purpose vehicle. Hurley Doddy, chief operating officer of ECP, said that Djibouti's proximity both to the sea and to the Middle East will result in significant advantages in shipping costs. ECP is banking on the potentially lucrative salt deposits in Lake Assal, Djibouti's largest lake and the lowest altitudinal point in Africa. A pure brine feed from the neighbouring Red Sea and a hot and dry climate accounts for the lake's status as the most saline body of water on earth. “It's one of the world's best deposits of salt. The natural conditions for making salt are about the best in the world,” said Doddy.
NIGERIAN TELECOM EXIT NETS 2.9X
Emerging Capital Partners (ECP) has made 2.9 times its original investment in Starcomms, a Nigerian mobile telecommunications operator. The Africa-focussed private equity firm sold its position in the company via a N64.35 billion ($547 million; €348 million) private placement preceding a listing on the Nigerian Stock Exchange, the first such listing of a telecom company. The transaction resulted in proceeds of approximately $99 million (€63 million), according to an ECP statement. ECP said it has invested a total of $34.3 million in Starcomms since 2005, when it teamed with emerging markets-focussed firm Actis to acquire a majority stake in the company for $43.2 million.
JOINT VENTURE TARGETS EGYPTIAN MID-MARKET
Beltone Private Equity, a division of Egyptian investment bank Beltone Financial, and SIGEFI Private Equity, the fund management arm of France's Siparex Group, are launching Beltone Mid-Market Fund, a $150 million (€94 million) private equity fund targeting Egypt and the Gulf Cooperation Council (GCC) countries. The fund will be managed by a joint venture fund management company in which Beltone will have a 75 percent interest and SIGEFI 25 percent. The fund management company will be headed by AM Omran, director of Beltone Private Equity. SIGEFI will have a representative on the investment committee of the fund and will participate in the management team. Beltone Mid-Market Fund is registered in Luxembourg and is an umbrella fund consisting of two sub-funds, a $100 million fund dedicated to Egypt and a $50 million fund focussed on GCC countries. The firm expects the fund to achieve a final close by June 2009.
ACTIS-LED CONSORTIUM PAYS $700M FOR ELECTRICAL CONTRACTOR
A consortium led by emerging markets private equity firm Actis has acquired energy engineering company Alstom South Africa for $700 million (€453 million). Actis partnered with Old Mutual Investment Group, the private equity arm of international investment bank Old Mutual, to purchase the Johannesburg-based business. Alstom South Africa is partially owned by the eponymous global energy giant, Alstom. Paris-based Alstom sold the division to a group of investors in 2002 that included Rand Merchant Bank. As a condition of the transaction, Alstom South Africa will sell back to its former parent its power service subsidiary, which provides maintenance services for turbines and generators. The acquisition was partially funded by debt financing provided by Nedbank.