The European Investment Bank (EIB) has signed a commitment with Lorax Capital Partners (LCP) Fund II in which the bank will invest $22m in the fund.
LCP Fund II is a generalist private equity fund that primarily targets capital investments in small- and medium-sized enterprises (SMEs) and mid-market companies in Egypt.
At the first closing, the fund attracted $140m of commitments, including from other international investors such as: the European Bank for Reconstruction and Development (EBRD); the International Finance Corporation (IFC); Proparco; and the Egyptian American Enterprise Fund (EAEF).
The fund manager, LCP Fund Manager BV, will adopt a hands-on value-adding investment strategy. It will also seek to invest in enterprises with robust growth potential in important economic sectors, including education, healthcare, manufacturing and services.
The fund aims to contribute to the development of Egypt’s private sector, by increasing access to capital for local SMEs and mid-market companies. At the same time, the fund will also support their growth and continued institutionalisation. Its portfolio companies are anticipated to contribute to strong job creation across Egypt.
The EIB’s investment comes as part of its Economic Resilience Initiative Risk Capital Facility (ERI RCF). The facility aims to foster private sector development and job creation through investments in venture capital and private equity funds.
It blends EIB’s own resources with resources of donors from the Economic Resilience Initiative Fund, to unlock more opportunities for the private sector in the southern Mediterranean region.
The EIB is the European Union’s (EU) long-term lending institution, and which is owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.
The Risk Capital Facility for the Southern Neighbourhood countries (Algeria, Morocco, Tunisia, Egypt, Jordan, Lebanon, Syria and the West Bank and Gaza) was set up by the European Commission.
The EIB provides access to equity and debt financing to SMEs in the Mediterranean region to support private sector development, inclusive growth and private sector job creation.
The facility’s main activities include investing in private equity funds; investing in and lending to microfinance institutions and microfinance investment vehicles; and providing Technical Assistance to financial intermediaries or final beneficiaries. The latter covers private equity funds, microfinance institutions, microfinance investment vehicles, banks and other financial institutions.