It is a testament of the vibrancy and growth of the private equity asset class in Egypt with the Egyptian Private Equity Association’s (EPEA) formation in 2011. Four years later, 2015 is set to be a banner year with estimations of deals reaching $100 million, in part due to predictions that investors are heading back to North Africa, especially Gulf investors. KITE Invest spoke with EPEA’s Executive Director, Dalia Tadros, in order to get a better glimpse of Egypt’s dynamic and relatively new private equity industry.
KITE Invest: Please address the reasons behind the founding of the EPEA in 2011 and what has the developmental process been like?
Dalia Tadros: EPEA was established in 2011, by a group of very senior distinguished private equity and financial sector professionals, with the objective of creating a unified body that brings together industry professionals, represents them, and enhances the capacity building, knowledge exchange, and business matchmaking among them and their business partners in the ecosystem.
Additionally, the association represents the voice of the industry versus economic decision makers, where EPEA has played a clear role in advising policy makers about investment climate enhancement, and major investors’ concerns. Through its relationships with peer associations in the region and globally, EPEA plays another role in marketing Egypt as a major investment destination in the region.
KITE: How would you describe the private equity community of Egypt and how it differs from its regional counterparts?
DT: Private equity investment in its globally known definition is relatively new in Egypt, but many private equity investment deals are increasingly taking place especially via family offices and high net worth families, as well as holding companies. Thus, the sector is picking up, with huge potential to grow, in an economy that is among the largest in the region, with endless profitable investment opportunities.
The country’s economy has a huge potential to grow and expand, and this cannot be only financed through the banking sector and stock exchange. Thus, private equity investment is expected to resume its growth more and more in the near future.
KITE: What specific factors are contributing to why 2015 is estimated to bring high volume deal?
DT: Many global and institutional investors were keeping an eye on the Egyptian market, waiting for security conditions and political stability to settle down, to complement an economically attractive destination for investments. While the government is working on availing these political and security pre-requisites, it is also working in parallel to avail the enabling environment for investment, through working on a more favorable set of regulations. Additionally, the Egypt Economic Development Conference, taking place on 13-15 March, is planned to bring together major local, regional, and international investors interested in the Egyptian economy. This would give rise to a huge amount of deals to materialize following the Summit.
KITE: In terms of investment opportunities in Egypt, could you shed light on any sector or industry that is attracting great attention?
DL: A greater number of sectors are garnering investors’ attention. Capitalizing on the growing population and increasing spending patterns of individuals and families, consumer-related sectors (such as FMCG, retail, healthcare and education) and energy (both conventional and renewables) are becoming the most promising sectors for investment.
KITE: The objectives of the EPEA entail awareness and advocacy, capacity building, development of a regulatory framework, and setting industry standards. Could you please shed light on EPEA’s objective of awareness and advocacy, specifically the relationship and status with the Government and policy makers?
DL: Talking about awareness, EPEA aims to spread awareness among small and medium-sized enterprises, about equity investment as an alternative (as well as complimentary) source of financing besides banks, which used to be traditionally the major source of finance. In addition, EPEA aims to spread awareness among university students about private equity as a prominent professional field of business.
Regarding advocacy, EPEA has several times engaged with regulatory bodies in the areas of suggesting new regulations. EPEA is also trying to work with regulatory bodies on establishing best practices for the industry.
KITE: Another main goal of EPEA is to diversify and expand its membership and alliances. What measures is EPEA taking to achieve this goal?
DL: Talking about a body representing the industry, the number of members, and to which extent they include the entire stakeholders of the industry, or services providers in the ecosystem of the industry, would be a major KPI. Additionally, EPEA has succeeded in bringing together industry professionals through various roundtable discussions, and seminars. EPEA is also working towards preparing the next generation of the industry leaders, through the training programs it provides to junior industry members.
KITE: Lastly, what final message would you like to communicate about the private equity community and investment opportunities in Egypt?
DL: Egypt has a huge population and a central location, which makes it a target market for goods and services, and international trade. Egypt is also so rich in both human and natural resources, which makes it a favorable destination for investment mega projects. The government has recently been working on the investment climate and investment friendly regulations and procedures, to enable the local investors (well aware of the challenges and opportunities in their market) to successfully partner with international investors, for profitable and scalable investment projects.