Egypt ministry to invest in Abraaj fund
Dubai, November 10, 2010
The Egyptian Ministry of Communications and Information Technology (MCIT) has announced plans to invest in a fund managed by top private equity group Abraaj Capital.
The $80 million Egypt Growth Capital Fund is part of Riyada Enterprise Development (Red), Abraaj Capital’s small and medium enterprises (SME) investment platform that aims to invest in and support SMEs across the broader Mena region.
It is dedicated to investing in high-growth SMEs in the Arab world’s most populous nation, where SMEs account for over 90 per cent of all businesses, said a Abraaj statement.
The MCIT said it will make the investment through its newly established Technology Innovation and Entrepreneurship Center (TIEC) and other affiliates.
The fund will have a specific allocation of $30 million dedicated to information and communications technology (ICT) and ICT-enabled businesses, which are of increasing importance within the Egyptian economy.
MCIT partners and affiliates will invest $12 million into the EGCF alongside a matching $12 million from the US government’s Overseas Private Investment Corporation (Opic) commitment to Red.
The Opic’s board recently approved up to $150 million to Red as part of its Global Technology and Innovation Fund (GTIF), one of President Obama's initiatives for Muslim majority countries. Opic is now negotiating that commitment. Abraaj Capital will invest at least another $10 million in the EGCF.
“Development of the technology sector is central to economic growth in today’s fast-paced global economy. Opic is pleased that TIEC is partnering with Abraaj Capital to support a fund that will help Egypt achieve that goal by investing in technology-based SMEs,” said Opic president and CEO Elizabeth Littlefield.
“The fund also represents a significant step toward fulfilling the pledge that President Obama made in his Cairo speech to support technological development in Muslim-majority countries,” she added.
Dr Tarek El-Sadany, CEO of TIEC, said the fund is an excellent vehicle for supporting the advancement of technology, innovation and entrepreneurship in Egypt.
The EGCF intends to invest in attractive high-growth Egyptian SMEs including businesses that leverage and benefit from innovation, knowledge and information technology.
At least $30 million of the $80 million will be invested in ICT and ICT-enabled industries, an attractive and fast-growing segment of the Egyptian economy.
Out of the $30 million technology allocation, the EGCF will be investing at least $6 million in fostering startups and early stage companies that are nurtured by the TIEC incubation and other support programs.
“We are very pleased that the MCIT and its affiliates have come on-board as a cornerstone investor of this fund,' said Abraaj Capital’s managing partner Mustafa Abdel-Wadood.
'We view technology, and IT in particular, as a core investment theme for our fund with the potential to deliver strong returns to our investors. Our collaboration with the MCIT and the TIEC is also intended to have a strong impact, not only on the Egyptian IT sector, but on the development of Egypt’s SME sector at large,” he added.-TradeArabia News Service