Gulf Capital joins in Egyptian investment recovery with petchems deal

Gulf Capital said it will make a Dh92 million investment in an Egyptian petrochemicals company as private equity funds return to the Arab world’s most populous nation.

The investment by the Abu Dhabi-based company follows a major economic conference in Egypt in March when Arabian Gulf nations and international corporations pledged about US$80 billion in aid and investment to help the country get back on its feet following four years of political turmoil.

“We are excited about the growth prospects of Egypt and are keen to increase our investments there,” said Karim El Solh, the company’s chief executive.

“The message from Egypt at the recent three-day Sharm El Sheikh conference which we attended in March was clear and promising: Egypt is committed to embarking on an ambitious growth plan and to attracting foreign investments in the country.”

Egypt is currently host to 11 private equity funds searching for limited partner commitments to invest in the country, according to a report from the Emerging Markets Private Equity Association published last month.

Gulf Capital, which has a total of $3.5bn of assets under management, made the investment in the Cairo-based Carbon Holdings through a convertible five-year loan facility that gives Gulf Capital the right to swap its shares into equity.

The money, which will come from Gulf Capital’s GC Credit Opportunities Fund 1, will go towards financing the development and expansion of three of the Egyptian company’s petrochemical projects.

The deal comes ahead of a possible initial public offering of Carbon Holdings on the Egyptian stock exchange in the next 36 months, said Basil El Baz, the company’s chairman and chief executive.

The three projects that will benefit from the cash injection are Egypt Hydrocarbon Corporation, a $550m aluminium nitrate plant; Oriental Petrochemicals Corporation, a polypropylene production plant; and Tahrir Petrochemicals Corporation, a $7.4bn naphtha cracker plant.

Mr El Baz said there was a shortfall in petrochemicals production in Egypt as well as good prospects for exporting.

“It is heavy industry that underpins any economy, and our government understands that and supports the industrialisation of Egypt in an unparalleled way,” he said. “We believe that the industrial sector in Egypt represents tremendous growth opportunities. We may be even witnessing the beginning of a proper industrial revolution.”

Mr El Solh said Gulf Capital, which has an existing investment in a glass-making company in Egypt, was eyeing more opportunities in the country in the fields of health care, consumer goods, oil and gas and petrochemicals. The company is also looking to raise $250m for another credit fund and by 2018 expects its assets under management will increase to $5bn.

Egypt, which is coming out of an economic slump after four years of political turbulence during which two presidents were removed amid popular uprisings, has attracted a multitude of investors betting on robust growth. The country, a net oil importer, will also be given a boost from the drop in crude prices.

At the economic conference in March, the country’s president, Abdel Fattah El Sisi, said he expected Egypt’s economy to grow at a rate of 6 per cent annually over the next five years as the country attracts investors through legal guarantees, incentives and cutting red tape.

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