EFG pumps $100m into Egypt refining firm
Cairo, June 19, 2012
Egypt-based EFG Hermes has partnered with InfraMed, a leading infrastructure fund in the Mena region, to invest $100 million in Egyptian Refining Company (ERC).
A landmark $3.7 billion refining project developed by Cairo-based private equity firm Citadel Capital, ERC is aimed at helping Egypt halve its diesel import needs, resulting in over $300 million in additional direct benefits to the state annually and spur job creation.
The investment was made through InfraMed's wholly-owned subsidiary InfraRev Holding into Orient Investment Properties, a holding company with a majority position in ERC, said Egyptian Fund Management Group (EFMG), unit of EFG Hermes, the investment advisor and partner of InfraMed in infrastructure deals in Egypt.
This equity injection represents an effective ownership of 15.6 per cent in Orient and, in turn, 7.5 per cent in ERC, it added.
Besides Egypt's EFG Hermes, the InfraMed is supported by four key institutional investors Caisse des Dépôts et Consignations (CDC), Cassa Depositi e Prestiti (Cdp), the European Investment Bank, Caisse de Dépôt et de Gestion (CDG) in Morocco.
This project marks EFMG and InfraMed’s first investment in Egypt, said a top official of EFG Hermes.
'It demonstrates EFMG’s outstanding ability to originate, analyse and execute deals for InfraMed in Egypt, even during periods of market volatility,' remarked Karim Moussa, the managing director of EFG Hermes.
'In partnership with InfraMed, we are supporting Egypt’s energy sector through a key investment in ERC, a project developed by Citadel Capital and which reached financial close on June 14,' he stated.
According to Moussa, Egypt is in need of substantial investments to build and upgrade its infrastructure.
'The financial close of ERC is a major milestone for the development of the country's energy sector. InfraMed's investment in ERC underlines its strong commitment to Egypt,' he noted.
Bakr Abdel-Wahab, the director of EFG Hermes, said “This transaction demonstrates our ability to originate and execute large and complex infrastructure deals in Egypt and the region.'
'Further, it reinforces our position as a leading infrastructure player and investor, capable of partnering with key financial and industrial sponsors,' he added.
Commenting on the investment, Citadel Capital founder and chairman Ahmed Heikal said,'ERC is more than one of Africa’s largest-ever project finance deals, it is also a transformative development for the Egyptian economy.'
'ERC will purchase fuel oil produced by the Cairo Oil Refinery Company and process it further to produce over 4.1 million tonnes of refined products and high-quality oil derivatives per year, including more than 2.3 million tonnes of Euro V diesel (the cleanest-burning diesel fuel in the world).'
The project will be operated as a public-private partnership under a 25-year supply and off-take agreement with the Egyptian General Petroleum Corporation (EGPC), a government-owned company.
According to Heikal, ERC is a key component of Egypt’s energy security going forward.
'The financial close of ERC with equity investment from InfraMed confirms to international investors and the global community that Egypt is open for business. The signal this sends is huge,” he added.
The project marks InfraMed’s second investment this year, following its commitment to Iskendurum Port in Turkey, where it is supporting the construction of the largest container operations port in the Eastern Mediterranean under a 36-year concession.
InfraMed’s transaction advisers on ERC included Clifford Chance and Al Kamel (legal), Mott MacDonald (technical) and Deloitte (tax and accounting).-TradeArabia News Service