EuroMena III on the way

Return on investment for EuroMena I
could reach one hundred percent

Preparations are underway to launch EuroMena III, the fourth MENA-dedicated private equity fund by Beirut-based Capital Trust Group (CTG). “Fundraising for the new fund starts in March and the fund will be up and running by end-2013,” said Romen Mathieu, Managing Director of EuroMena. CTG is aiming to raise $150 to $250 million for EuroMena III. The first closing is expected by September.

The fund will be managed by the current Euromena management, led by Mathieu and Gilles de Clerck, Executive Director. “The fund will follow the same strategy of its two predecessors, EuroMena I and II,” Mathieu said. EuroMena III will target firms in productive sectors, including energy, financial services, food and beverages, pharmaceuticals, Information Technology, and consumer goods. Its investments will focus on expansionary/development capital, with the investment in target companies ranging between $15 million and $30 million.

Investors in the new fund are mostly the same investors as in EuroMena I and II, with some new entries. “A circle of new investors approached us lately and expressed their interest in joining the fund,” said Mathieu. The minimum commitment to the EuroMena III is $2 million for corporate or institutional investors, and $500,000 for individuals.

EuroMena II has recently acquired 20 percent of Egypt's Easy Group, a manufacturer of natural depilatory, wet wipes, and antiseptic products. This investment is the third one in Egypt out of EuroMena II's total of five investments, worth $60 million. The other two investments are in Lebanon, with $13.6 million in home appliances’ retailer Khoury Home and $20 million in First National Bank. EuroMena II was initially dedicated to all MENA countries, but, according to Mathieu, Lebanon and Egypt had the most favorable opportunities. “Syria was crossed out with the ongoing turmoil and Jordan does not have much going on. Tunisia is still politically unclean with lots of the available opportunities there linked to the old regime. Algeria is not ready to take in foreign investments, and although Morocco is a very promising market, no serious opportunities were tackled there.”

The previous $100-million EuroMena II will make one more investment before it becomes fully invested. “The last investment will also be in Lebanon or Egypt where four investment options are being considered,” said Mathieu. The investment is expected to be finalized by end-August. “Lebanon has always been an exception to all MENA countries, as it has an open economy where you can enter an investment and have all your transactions carried out with transparency and without having to worry about getting them done,” said Mathieu. EuroMena’s strategy is to target firms which have geographically diversified risk. “We approach either companies which do not have 100 percent of their risk locally, or ones that are immune to economic slowdown, such as some segments of retail.” According to Mathieu, “Egypt is a huge market and is often too big to be affected by instability in some of its regions.”

EuroMena’s first fund is now in its exit cycle. The $65-million fund has exited Siniora Food, a Jordan-based industrial firm, earlier this February. The fund, which was fully invested in nine companies by end-2009, has made four exits so far including Beirut-based Sodamco and Intercontinental Bank of Lebanon (IBL). The fund has generated more than two times invested capital from the exited investments and aims for a complete exit by end-2013.

The initial MENA fund managed by CTG was MENAVEST, the $54 million-fund which it had founded and liquidated before founding EuroMena I.