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Wednesday, 31 March 2021

SFE makes its first investment in education with EFG fund

EFG Education Fund hits third close with SFE investment: The Sovereign Fund of Egypt (SFE) has committed EGP 250 mn (c. USD 15.9 mn) to the EFG Hermes Education Fund, according to a joint statement (pdf) published yesterday. The investment brings the fund to its third close, a source with direct knowledge of the matter told Enterprise. This will be the only investment in the fund’s third and final close, Karim Moussa, the head of asset management and private equity at EFG Hermes, told us.

EFG’s education fund now has some USD 150 mn in dry powder to invest, “which perfectly positions us to continue expanding our scope in the Egyptian market,” Moussa said. The third close makes the fund “one of the largest specialized investment funds in the MENA region,” he added. The education fund had an initial close in 2018 that saw it land commitments worth a combined USD 119 mn from local and foreign investors. It reached a second close in June 2019 with commitments from regional institutional investors, Moussa told us.

About the education fund: Established in 2018, the fund was set up as a 50/50 JV between EFG and GEMS Education to invest in Egypt’s K12 education sector. It is managed by the investment bank’s private equity unit. EFG said at the time that it expected to invest USD 300 mn in Egyptian schools over the next five years.

The SFE also signed an MoU with GEMS Egypt to build and operate two national schools in west Cairo, the statement said. The schools will be built on SFE-owned land and will each have capacity for 2.5k students. The MoU “will help [GEMS] expand our geographical presence in the local market while maximizing value for landowners like SFE through long-term impactful investments,” GEMS Egypt CEO Ahmed Wahby said in the statement.

This is the first education investment for the SFE — but not the first expression of interest in the sector: The fund said last year that it was in talks with several foreign companies to get them to invest in education, after signing an agreement with private equity giant Actis to drive investment in priority sectors in Egypt’s economy, including education.

And it won’t be the commitment the SFE makes to an industry-specific fund: The SFE will follow up the partnership by making “similar alliances with entities that possess technical know-how and the necessary capital in the near future,” said CEO Ayman Soliman.

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