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Tuesday, 21 January 2020

Actis inks MoU with sovereign fund to drive investment to Egypt

INVESTMENT WATCH- Actis inks MoU with sovereign fund to drive investment to Egypt: UK-based private equity giant Actis yesterday signed an agreement with the Egyptian government that will see it invest alongside The Sovereign Fund of Egypt (TSFE) in “energy and infrastructure and directly support [the fund’s] objective to attract private investment in critical sectors for Egypt’s economy,” it said in a statement. The agreement was inked on the sidelines of the UK-Africa Investment Summit in London.

Priority sectors will include infrastructure, renewable energy, health and education, said Planning Minister Halal El Said, who attended the signing along with UK Secretary of State for International Trade Liz Truss.

We’re unclear how much capital Actis is pledging to commit over the coming period, but at the summit El Said told reporters (watch, runtime: 2:35) that the agreement will see some GBP 3 bn worth of investment in infrastructure, health and education over the next three years. We’re reading that as the total investment the partnership will allocate, including capital committed by Actis and potentially others, and assets brought into the equation by TSFE. That’s the fund’s reason for being: Get private-sector investors to bring cash and know-how while it contributes state-owned assets. The sum total is the value of the investment.

Egypt is one of Actis’ most important markets, said Actis partner and head of MENA Sherif Elkholy. Both Youm7 and Reuters have coverage, which Reuters positions the agreement as Actis and TSFE “teaming up” to “help attract and steer private investment into Egypt and to cooperate in energy and infrastructure projects.”

Actis has made “strong” bid for power plants: TSFE CEO Ayman Soliman said yesterday that the fund has received a “strong proposal” from the firm for a stake in one of the three 4.8 GW Siemens-built combined-cycle power plants. “We consider Actis’ proposal to be a strong sign reflecting its underlying interest in expanding its investments in Egypt and we look forward to unlocking further appetite and value through such partnerships,” Soliman said. Actis is one of six investors in the running to obtain a stake, alongside France’s Engie, China Datang Overseas, Blackstone Group’s Zarou and Edra Holdings. Electricity Ministry sources had said previously that Blackstone’s Zarou had submitted the best financial offer, making it the top contender. Planning Minister Hala El Saed met its CEO earlier this month. The transaction is set to be completed this year.

Also at the summit: CIB took on a USD 100 mn loan from the CDC Group, the UK government-owned development finance institution said in a statement. The facility, which is subject to regulatory approval, is part of CDC’s bid to invest GBP 2 bn in African businesses by 2021, with USD 400 mn in financing agreements announced at the summit yesterday. CDC last year became the first company to be granted a license from the Central Bank of Egypt to act as a “tier two” lender. The company said then that it plans to offer as much as USD 200 mn to Egyptian banks.

Egypt, UK announce economic partnership to realise Egypt's 2030 vision: International Cooperation Minister Rania Al Mashat and UK Secretary for International Development Alok Sharma agreed to establish a “joint economic partnership” to help Egypt realise its Vision 2030 development strategy, a ministry statement said. The UK will provide GBP 13 mn in financial aid to support economic growth, social development, and youth empowerment, a GBP 3 mn financial inclusion grant, and a GBP 8 mn grant to invest in youth employment programs, in addition to technical assistance to support structural reforms and private sector development. Al Mashat also met CDC executives who said they plan on opening a branch in Cairo by the middle of this year.

Egypt wants to build “serious partnerships” between Africa and the UK, President Abdel Fattah El Sisi said during his speech at the summit. The summit was one of the last events El Sisi will attend in his capacity as African Union chair, with the presidency set to pass to South African President Cyril Ramaphosa next month. Al Masry Al Youm has more on the speech.

The summit also played host to diplomatic gatherings: Foreign Minister Sameh Shoukry held talks with his British counterpart Dominic Raab, while El Sisi met Mauritius President Pravind Jugnauth and his Congolese counterpart Félix Tshisekedi.

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