CAIRO: General Cable Spain, an affiliate of US-based General Cable, purchased 100 percent of BICC Egypt, a medium-sized producer of low voltage cables, in a deal worth $21.7 million. A consortium led by Karnak Investment Fund — managed through Sphinx Egypt, a Cairo-based private equity firm established by Citadel Capital with over $250 million in funds under management — completed the exit from BICC by selling to Spain's General Cable. The sellers reportedly made a 38 percent internal rate of return on their investment in BICC. Gregory Kenny, CEO of General Cable, said at a press conference Tuesday that Egypt is a perfect platform for General Cable's European and African activities. “This represents a great marriage between two companies, which will help us combine ideas, and is a powerful equation,” he continued. Egypt is a particularly attractive market because of the recent drive for investment in infrastructure projects, he added. Jordi Torras, vice president of Europe and North Africa for General Cable, said that the purchase is in line with the firm's expansion plans into emerging markets. Before its purchase by the American giant, General Cable, which is a market leader in cable products across a wide range of industries, BICC's future was less than assured. The firm was in serious financial straits, accruing a debt of LE 115 million, LE 130 million in cumulative net losses, and a negative LE 86 million in net worth. In 2005, the Karnak Investment Fund orchestrated its acquisition, with support from its partner, Mansour and Maghrabi Investment and Development (MMID), from its creditor bank, NSGB, which had seized its assets and equity. BICC's revenues were hovering around LE 9 million, and its market share was declining to less than 1 percent. However, discussions proved to be lengthy: 16 months total. Marianne Ghali, chairwoman and managing director of Sphinx Egypt, which is sponsored by the International Finance Corporation and the European Investment Bank, underscored: “There's no doubt that it was a tough call to have bet against all the odds in a market controlled by regional giant El Sewedy Cables.” Nevertheless, Karnak Investment Fund, which specializes in turning around distressed assets like BICC, was able to ensure that the Egyptian firm made a volte-face. Indeed, its turnover grew 16 times to over LE 165 million, and its market share in Egypt jumped to 12 percent. Before its sale to its new US parent, its cumulative profits had reached an excess of LE 65 million. Furthermore, the workforce went from 10 to 300 by the end of Karnak's intervention. The deal proved fruitful for Sphinx's Karnak Fund as evidenced by the 38 percent return on investment in spite of “difficult market conditions,” Ghali noted. BICC's success under the fund's management was facilitated by “good timing,” she said, as the Egyptian government had introduced new macro-economic reforms, which in turn spurred demand for electric cables in the construction and industrial sectors. After the Sphinx takeover, BICC's chairman and CEO Naguib Karass was appointed to steer the firm, and he will continue to drive the company under General Cable, but with new management at his sides. For his part, “the Karnak-led consortium has been an important catalyst for growth,” Karass said.
