One of the first investors to work with Ezdehar on its fund was the European Investment Bank. “At the time, very few international investors were considering investing in Egypt,” says Marius Chirila, an equity investment officer at the European Investment Bank. “Even many development finance institutions had restrictions on investing in Egypt, because of the country risk. The EIB was the first institutional investor to work with Ezdehar on shaping its proposal, essentially contributing to the re-emergence of the Egyptian private equity industry. Since then, Ezdehar’s progress has been remarkable. The team has had a significant impact on the economy as a whole and in particular on the growth and institutionalisation of local small and medium-sized enterprises in line with international standards.”
The European Investment Bank invested capital from the Risk Capital Facility for the Southern Neighbourhood, which is set up by the European Commission and the EIB, in Ezdehar’s inaugural fund. The European Bank for Reconstruction and Development, the Dutch entrepreneurial development bank FMO, and the UK development financial institution CDC are also investors in Ezdehar’s inaugural fund.
Second fund raising for Egypt private equity
Thanks to its success, Ezdehar is now in the process of raising a second investment fund. The firm is seeking to reach a fund size of over $100 million, beyond the $84 million in its first fund.
The European Investment Bank has been actively involved in private equity and venture capital across emerging markets since the early 1990s and played a key role in the establishment of the first private equity fund managers in several countries. Private equity can play a unique and important role in emerging markets where debt financing and capital markets are still underdeveloped, especially for small and medium-sized companies. In addition to capital, private equity firms also provide expertise to help companies develop, institutionalise, and adopt best practices in terms of environmental, social and governance matters.
“Private equity 2.0 in Egypt has really been driven by international financial institutions. Without them, it never would have happened. They really helped to restart the whole industry,” says Ezdehar’s Barsoum.
Prosperity and Egypt private equity
Like Ahmed El Guindy, Ezdehar’s founders also had a dream.
“Private equity is a means to an end, but when my partners and I were discussing things at the beginning we talked a lot about our dreams and goals,” recalls Barsoum. “Egypt is a big country with 100 million people and a strategic location, but it doesn’t have many corporate exporters or regional champions. Our dream is to see a good number of companies in Egypt reach the level of governance and professionalism to become strong companies that operate at the level of multinationals and can compete internationally.
“A well-developed private equity sector could help to transform a hundred companies and many more indirectly by raising standards.”
Karim Ragab, Ezdehar’s operating director, explains that “Ezdehar means prosperity in Arabic. We believe that by professionalising companies and making them better at what they do, we can help build prosperity in Egypt and the region. Our name is also our core purpose as a firm.”
Egypt private equity investment strategy
Raising the level of environmental, social and corporate governance standards in the companies they invest in is an important part of Ezdehar’s investment strategy.