Proparco, the private sector financing arm of the Agence Française de Développement (AFD), will invest $11m in the Egypt-focused LCP Fund II, according to a press release on Monday.
The financing will go towards helping bridge the long-term financing gap for Egyptian mid-cap companies.
Incorporated in 2015, Lorax Capital Partners (LCP) is an Egypt-focused private equity firm. Over the last five years, LCP has supported the Egyptian American Enterprise Fund (EAEF) in deploying about $175m to five companies.
One of their most notable investments was in Fawry, which is now Egypt’s largest e-payment network and which made its debut listing on the Cairo Stock Exchange in August 2019.
The company was also the first unicorn in Egypt and one of the first in Africa. Being a growth capital investor, LCP’s has a notably strong focus on technology, which the team integrates as a core component in its investment case.
LCP Fund II constitutes its first multi-investors fundraising, with Proparco’s $11m investment contributing to the fund’s first closing of $142m. The French financing comes alongside other funding from the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the International Finance Corporation (IFC), and the EAEF.
With a target size of $250m, the new fund plans to support profitable and growing midcap companies in promising sectors of the Egyptian economy, favouring local consumption and production as well as financial inclusion.
The fund will also target companies eager to expand regionally. The manager will aim to implement best governance, environmental and social practices in the portfolio companies, while helping them to increase their value creation.
Proparco’s investment will support economic development and job creation in Egypt, contributing to goal 8, representing decent work and economic growth, of the UN’s Sustainable Development Goals (SDG).
By participating in the first closing of the fund, Proparco is also supporting the development of private equity in Egypt and the region. As a result, this operation will contribute to reducing the long-term financing gap in Egypt for small- and medium-sized enterprises (SMEs) and mid-cap companies. This is all the more important in a period of economic downturn caused by the novel coronavirus (COVID-19) crisis.
Proparco has, for 40 years, been supporting sustainable development across Africa, Asia, Latin America and the Middle East. As the private sector financing arm of AFD, Proparco provides funding and support to companies and financial institutions and helps them control the impacts of their activity.
