IFC, a member of the World Bank Group, has announced an investment up to $20m into SPE AIF I, a fund managed by SPE Capital Partners, a newly independent, institutionalized private equity fund manager operating in MENA.

SPE AIF I will focus mainly on Egypt, Morocco and Tunisia, where access to equity is especially constrained because of the macro-economic and political challenges.

“By backing an experienced fund manager focused on the MENA market, IFC’s support will help signal the continued viability of private equity in the region,” said Beatrice Maser, IFC’s Regional Director for MENA.

“Greater access to such financing can help spur private sector development and job creation, which are both still much needed in the region.”

While private equity has emerged as a critical source of equity financing for smaller cap companies globally, the penetration rate is just 0.02% in North Africa, compared to 0.11% in emerging markets, according to EMPEA data as of September 2018.

The investment is part of IFC’s strategy to partner with selected fund managers in key regions to meet the needs of fast-growing companies, to help mobilize additional institutional capital in high growth sectors and ultimately strengthen capital markets.  

Lack of risk capital hinders economic growth and thwarts entrepreneurship across MENA.

By providing capital private equity and venture capital can play a critical role in development, helping to build the dynamic, job-creating companies that drive prosperity, provide essential goods and services, and strengthen the middle class.

In FY20, IFC has invested a total of $40.5m in private equity and venture capital funds to support businesses in MENA.

Nabil Triki, Managing Partner and CEO of SPE Capital said: “With IFC’s support, we hope to not only provide growth capital, but also industry and value-creation expertise, which are all currently limited in MENA with focus on North Africa. There is growing demand for such support because businesses are increasingly recognizing the benefits of institutional ownership and professional management.”