Back to the complete issue
Tuesday, 9 February 2021

Raya’s new fund could be the first mainstream alternative to securitization

Raya Holding is planning to set up a fund that will invest in the portfolios of non-banking financial services (NBFS) companies, Al Mal reports, citing people familiar with the matter. The company will partner with an unnamed asset manager to set up the fund, the targeted value of which was not disclosed.

Think of it as securitization through a different door: The fund will raise money from investors to invest in the portfolios of non-bank lenders. The NBFS lender gets the net present value of a portfolio of loans now, and the fund collects the regular payments and takes both the upside and the risk. The sources didn’t specify whether the fund would be open to both retail and institutional buyers.

The fund’s first investment could see it take part of subsidiary Aman Holding’s portfolio, a move that would see Raya scrap plans to take EGP 600 mn in securitized bonds to the market later this year.

Background: The Financial Regulatory Authority last summer allowed a new type of fund specialized in what finance nerds call “movable assets.” Those funds provide liquidity to businesses by using assets such as accounts receivables, inventories, and machinery as collateral. Unlike securitization, this doesn’t require issuing bonds or the setup of a special purpose vehicle.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2021 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of Commercial International Bank (tax ID: 204-891-949), the largest private-sector bank in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; and Act Financial (tax ID: 493-924-612), the leading activist investor in Egypt; and Abu Auf (tax ID: 584-628-846), the leading health foodmaker in Egypt and the region.