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| Sphinx Fund |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 26638 |
| Company name | Sphinx Turnaround Fund |
| Country | Egypt |
| Sector | Collective Investment Vehicles |
| Environmental category | FI |
| Department | Private Equity and Investment Funds |
| Status | Pending Approval |
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| Date SPI disclosed | May 7, 2008 |
| Projected board date | June 19, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| Sphinx Turnaround Fund is a $100 million fund being established to invest in equity and quasi-equity in turnaround small and medium enterprises (SME) in Egypt. The fund intends to do diversified investments of $10-15 million on average per company, to acquire majority or controlling stakes in distressed or defaulting companies with the objective of creating value through restructuring and re-launching of the company. Companies of interest shall be in industries where Egypt has a competitive advantage or is an export oriented business or where the investment is a purely local play where consolidation in the sector is imminent. |
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| Project sponsor and major shareholders of project company |
The fund will be managed by Sphinx Capital Corp, a BVI company owned 80% by Citadel Capital, and 20% by Ms. Marianne Ghali. Ms. Ghali is the managing director for Sphinx Capital and has extensive experience in managing private equity funds for institutional investors in Egypt with an impressive performance. During her tenure, Ms. Ghali was successful in implementing several turnarounds.
The fund sponsor is Citadel Capital, one of the leading private equity fund managers in Egypt with a successful track record. Citadel capital was founded in 2003 by Dr. Ahmed Heikal and Mr. Hisham El-Khazindar. Citadel Capital is a leading private equity investing company focusing on investments in selected economies and capital markets in the Arab world using buyouts and turnarounds structures. |
| Total project cost and amount and nature of IFC's investment |
| The Fund is targeting a first closing in July 2008 with committed capital of $75 million. The proposal for IFC is to make an equity commitment of up to $20 million not to exceed 20% of total commitments in the Fund. |
| Location of project and description of site |
| The fund will be established in a tax efficient jurisdiction in Europe. The Fund Manager (General Partner) is registered and incorporated in the BVI. The GP shall retain Sphinx Private Equity Management a company established in Egypt, as Advisor. The management team will be based in Cairo, Egypt. |
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| Anticipated development impact of the project |
- Private sector development:
The fund will provide value addition in the form of managerial and strategic support to improve portfolio companies’ competitiveness.
- Implementation of best practices for corporate governance:
The fund will adopt best practices in corporate governance, thus improving and transferring knowledge and skills to its investee companies.
- Economic development:
The fund will provide restructuring to investee companies, putting distressed assets back into operations and increasing employment.
- Support for Small and Medium Enterprises (SMEs):
The fund is expected to invest in distressed SMEs in Egypt, thus tapping and developing a new market. |
| IFC's expected development contribution |
- Catalytic Effect:
The fund will capitalize on IFC’s name to attract both local and foreign investors. IFC’s name will add credibility to a new manager in a new assets class, thus giving comfort to investors.
- Knowledge transfer:
IFC will bring knowledge and experience in investing in distressed assets, which is a significant value addition to the fund.
- Fund structuring role:
IFC will work closely with the manager on structuring the fund in accordance with IFC and international best practices given IFC’s extensive expertise in this area.
- Governance of the fund:
IFC will be able to share its knowledge and expertise in corporate governance through participation on the Fund’s governance structure.
- Environmental & social:
IFC will contribute to the sustainability of economic development by incorporating environmental and social standards. |
| Environmental and social issues - Category FI |
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
During appraisal, IFC will analyze the Fund’s expected portfolio and sectors of investment and determine the Applicable Requirements if any, that would include a combination of:
- The IFC FI Exclusion List and/or,
- The applicable National Social and Environmental Laws and Regulations and/or,
- The IFC Performance Standards.
IFC will also review, if required, the capacity of the Fund to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). IFC may suggest Supplemental Actions to address any gaps in the SEMS if required.
The Fund Manager will be required to:
- Develop SEMS, prior to disbursement to the satisfaction of IFC,
- Identify responsible, qualified persons to manage and implement the SEMS,
- Commit to implement the SEMS to ensure that its investments/activities are in compliance with the Applicable Requirements,
- Take action to remedy any gaps in SEMS implementation on an ongoing basis,
- Submit a periodic report to IFC according to a format to be provided by IFC. |
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| For inquiries about the project, contact: |
Ms. Marianne Ghali, Chair and Managing Director
Sphinx Private Equity Management
4 Osoris st., Garden City
Cairo, Egypt
Telephone: +202 27945553
Fax: +202 27925849 |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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