US Commits $455 Million For Five MENA Startup Investment Funds

The Board of Directors of the Overseas Private Investment Corporation (OPIC), an agency of the US government that invests in businesses in emerging markets, has approved a total of $455 million in financing to support the establishment of five private equity investment funds designed to invest in companies in the Middle East and North Africa (MENA), in response to an announcement made by President Obama last year. The five funds combined could potentially catalyze more than $2 billion of investment in the MENA region.

At a speech in Cairo in June 2009, President Obama announced that the United States would launch an investment fund to support technological development in Muslim-majority countries. OPIC responded last October by issuing a call for proposals to manage a Global Technology and Innovation Fund, intended to catalyze private sector investments that promote technological growth in OPIC-eligible countries Asia, the Middle East and Africa. The five funds approved were among 87 responses to the call.

The investment funds approved by the Board were:

Riyada Enterprise Development Growth Capital Fund
$150 million in financing have been approved to support the fund, which will invest in small and medium-sized enterprises (SMEs) throughout the MENA region, particularly companies which stand to benefit from investment in technology.

Target countries for the fund include Egypt, Turkey, Palestinian Territories, Jordan, Lebanon, Pakistan, Oman, Algeria and Morocco.

Abraaj Capital Group; which was formed in 2002 and with offices in Egypt, Jordan, Lebanon, Pakistan, Turkey, Saudi Arabia and the United Arab Emirates; was selected as fund manager. Abraaj is often credited with establishing one of the first private equity funds based in the MENA region and has raised $7.0 billion since inception.

The fund has a target capitalization of $500 million.

Accelerator Technology and Innovation Capital Partners
Up to $25 million have been approved to support the fund, which will provide growth-stage financing to MENA companies in the digital content, internet services, mobile applications, mobile financial services, technology services and platforms, next generation media, entertainment and software development sectors. Target countries for the fund include Jordan, Lebanon, Palestinian Territories, Egypt, Morocco and Tunisia among other Arab and Islamic countries.

AcceleratorTech Capital Partners; which is owned by Accelerator Technology Holdings, a Jordan-based company widely credited for creating a venture capital industry in the region; was selected as fund manager.

The fund has a target capitalization of $75 million.

KIPCO Opportunity Fund
Up to $150 million in financing have been approved to support the fund, which expects to invest primarily in companies which are positioned to benefit from rapid economic growth, developing infrastructure and maturing financial markets in the MENA region, including in the financial services, media, infrastructure and information technology sectors.

Target countries for the fund are Jordan, Lebanon, Algeria, Egypt, Morocco and Tunisia, although the fund may also invest in other countries in the MENA region.

KIPCO Private Equity; which is owned by Kuwait Projects Company (Holding) K.S.C. (Closed), a Kuwait-based company which to date has made over 60 investments valued at approximately $23 billion; was selected as fund manager.

The fund has a target capitalization of $1 billion.

Citadel Capital Joint Investment Fund
Up to $100 million in financing have been approved to support the fund, which will invest in companies in various stages of maturity, including traditional buyouts, growth capital investments, turnaround situations and greenfield projects. Sectors of interest include waste management, transportation and logistics, manufacturing, and production of building materials and alternative energy.

The fund will invest a significant amount of its capital in Egyptian companies which will be used as platform investments to expand throughout the region, although the fund is designed to invest throughout the MENA region, as well as East Africa and the Persian Gulf.

Citadel Capital Management Limited; a wholly owned subsidiary of Citadel Capital SAE, an Egypt-based company which is one of the leading private equity investment firms in the MENA region; was selected as fund manager. Citadel Capital currently manages a total of $3.7 billion in equity and has completed investments in 19 platform ompanies.

The new fund has a target capitalization of $500 million.

Siraj Palestine Fund I
Up to $30 million in financing have been approved to support the fund, which will invest in start-ups and SMEs in the Palestinian Territories, and potentially in larger companies with growth potential. The fund will focus on companies with the potential to become market leaders in the Palestinian Territories or expand their operations internationally, primarily in the MENA region.

Sectors of interest to the fund include information and communication technology services, agriculture, clean technology, healthcare, education, manufacturing and financial services.

Siraj Fund Management Company; a Ramallah-based company owned by Massar International, another Palestinian company that manages a network of 15 subsidiaries operating in real estate development, financial services, and corporate business development; was selected as fund manager.

The fund has a target capitalization of $80 million.