Abraaj Capital takes its chance on North Africa

Abraaj Capital of Dubai has acquired the North African operations of the French asset management giant Amundi.
Mustafa Abdel-Wadood, the chief executive of Abraaj Capital, that the purchase could act as a springboard for further investment in Africa. Reuters
Mustafa Abdel-Wadood, the chief executive of Abraaj Capital, that the purchase could act as a springboard for further investment in Africa. Reuters

Abraaj Capital, the Middle East's biggest buyout firm, is deepening its foothold in North Africa in hopes of latching on to the region's "new economic growth" following revolutions that swept through Tunisia, Egypt and Libya.

The company, based in Dubai, yesterday said it acquired the North African operations of Amundi, a French asset management giant owned by Societe Generale and Credit Agricole. The purchase came with an 11-member investment team and offices in Tunisia and Morocco.

The team runs a US$161 million (Dh591.3m) private equity fund that has five investments in small and medium-sized businesses in North Africa. It is in the process of establishing a third office in Algeria, and Mustafa Abdel-Wadood, the chief executive of Abraaj Capital, said that the purchase could act as a springboard for further investment in Africa.

"We are very pleased to announce the finalisation of this transaction, which will provide an excellent platform for our growth plans in North Africa and, beyond that, the continent of Africa," he said.

Under the terms of the deal, Abraaj will assume management of Amundi's SGAM Al Kantara Fund, absorb its offices and staff and take over the company's own stake in the fund. Abraaj did not disclose the value of the deal.

The purchase comes as Abraaj makes a renewed push in North Africa and focuses increasingly on smaller businesses. Two years ago, Abraaj bought Riyada Ventures, a firm that helped to fund and grow small businesses. Riyada has since been integrated into Abraaj and is now the cornerstone of Riyada Enterprise Development (RED), its small-business division.

"I think we achieve a number of aims with this transaction, one of which is we immediately get experienced native feet on the ground in countries where we haven't previously," said Tom Speechley, a senior partner at Abraaj and the chief executive of RED.

Opportunities abound in the region as post-revolutionary economies begin to restart, he added. With the new staff on its rolls, Mr Speechley said he expected to make five to 10 new investments in the next year to 18 months. Target countries range from Tunisia, Morocco, Egypt, Algeria and even Libya, once the political situation stabilises.

"We strongly believe in the economic potential of these countries, past and current uncertainty aside," he said. "We think the long-term prospects for those economies is good, especially when you look at the [small-business] segment. Those markets are generally under-served in terms of growth capital for small businesses. You have to take the long-term view."

The IMF and other economic bodies have revised economic growth forecasts downwards following this year's unrest. The IMF now expects Egypt's GDP to grow by 1 per cent this year and 4 per cent next year. Tunisia's is expected to rise 1.3 per cent this year and 5.6 per cent next year.

Abraaj has large holdings in North Africa, but almost all of them are in Egypt. They include The 47th, a Cairo office building it bought in December through its ASAS property fund, and a stake in Egypt's Al Borg Laboratories, the Middle East's largest private medical lab. Through its funds, Abraaj also owns stakes in an Egyptian sugar producer and Orascom Construction Industries, the country's largest builder.

Since its founding in 2002, Abraaj has deployed about $7 billion on investments in the Middle East and North Africa, according to its website.


Published: August 29, 2011 04:00 AM


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