CAIRO: “Private equity opportunities are tremendous,” Abdalla ElEbiary, Citadel Capital managing director, said at the SuperReturn African 2010 conference. The three-day private equity and venture capital conference, which opened Monday, is taking place in Africa for the first time. ElEbiary noted that the Egyptian government has been diminishing its role in providing goods, while demand for them as well as services has been expanding due to a burgeoning population, which is maturing as a consumer, as well. Mark Rorison, group director and head of research for CI Capital, stated that Africa overall and Egypt in specific are a “land of opportunity” for private equity. Ahmed Badreldin, executive director of Abraaj Capital, said that his firm is focusing on the healthcare sector, adding that Abraaj currently owns a 50 percent stake in a hospital group located in Turkey. Badreldin noted that other areas of pronounced focus include logistics and distribution as well as packaging. There is “a lot of room to roll up small companies into one player,” which would then target the international level, he added. Abdel-Monem Omran, chief investment officer at Beltone Private Equity, said that Egypt offers unique investment opportunities in the field of agri-business, as the country's geographical size translates into diverse climatic conditions, from the Nile Delta in Lower Egypt to Aswan in Upper Egypt, meaning diverse types of crops can be grown at different periods throughout the year. Due to its strategic location under Europe's belly, the Egyptian agri-business sector can ensure export deliveries in a shorter period of time than other destinations, he added. Hassan El-Khatib, managing director of the Carlyle Group, commented that his firm is also keenly interested in the hospital sector. Currently the Carlyle Group has 13 hospitals in its portfolio and is eyeing further expansion in the sector. While panelists were in consensus over the potential for expanding private equity in the region, Omran said that the domain of private equity still remains “relatively young” in Egypt. Many firms in Egypt are still in the development stage in which European firms found themselves in the 1980s, qualifying them as “niche players that need added value.” Badreldin echoed Omran's contention that a key challenge for firms such as his is “dealing with family companies” that fail to understand the importance of seeking external support to bolster their promising businesses to the next level of competition. He added that in the field of human resources, finding qualified personnel is a formidable challenge, and that affording top caliber individuals for specific positions is becoming increasingly onerous by the day. Omran also explained that due to these obstacles resulting from inadequate structures and know-how, investment firms lose significant time and resources providing on the ground support to local businesses. His firm, he said, “has financial staff members practically working part-time as chief financial officer,” which extracts substantial amounts of time from identifying and closing transactions. Asked what needs to be improved within the regulatory environment for private equity, Badreldin pointed out that in the field of industry, the laws governing it need to change, underlining that the current legislation makes it overly complicated to establish funds, general and limited partnerships. He additionally stated that the reforms undertaken in 2004 need to be continued, otherwise Egypt's current growth would be unsustainable. Interestingly, Badreldin explained that a group of 300-400 high net-worth individuals and families have been “doing the tour” of the globe, investing in Asia and Latin America, and now, he believes, the Middle East is poised to capitalize this group's next investing spree.
