Gulf Capital, one of the leading and most active alternative investment firms in the Middle East, announced today that it has received an anchor investment of US$ 20 million into its pioneering credit and mezzanine fund from the International Finance Corporation (“IFC”), a member of the World Bank Group. This brings the total investments in the Gulf Capital Credit Opportunities Fund to US$215 million, positioning it as the largest credit fund in the Middle East.
The announcement came at a signing ceremony between Gulf Capital and IFC, attended by Mr. K. Aftab Ahmed, IFC Director for Financial Markets and Private Equity Funds, for Europe, Central Asia, the Middle East, and North Africa, Dr Karim El Solh, Chief Executive Officer of Gulf Capital, Mr Christopher Baines and Mr Walid Cherif, Co-Heads of Gulf Credit Partners, which is managing the Gulf Capital Credit Opportunities Fund.
Gulf Capital Credit Opportunities Fund will contribute to sustainable economic growth by lending to companies in various sectors including infrastructure, healthcare, education, and manufacturing. The investment agreement with the IFC will help provide long-term financing to small and medium enterprises in Turkey and the Middle East and North Africa (MENA), expand access to finance and create jobs.
The successful third close of Gulf Credits Partners’ maiden regional credit fund has already attracted commitments from blue-chip institutional investors and leading family offices from the region and around the world. Launched by Gulf Capital in late 2011, the Fund provides much needed liquidity and growth capital for regional SMEs and companies, as well as acquisition finance for private equity firms in the Middle East and Turkey. It will continue to target small companies that are growing, with good prospects to take on more employees."
"More than half of small and medium businesses in the Middle East and North Africa don’t have access to credit," K. Aftab Ahmed, IFC Director for Financial Markets and Private Equity Funds, for Europe, Central Asia, the Middle East, and North Africa. "IFC’s investment in Gulf Credit will facilitate the availability of much-needed mezzanine financing in the region to businesses. Investments such as these can help accelerate growth and strengthen good governance."
This investment builds on a long-standing relationship between IFC and Gulf Capital, which have co-invested in companies in MENA since 2008. Those firms include Metito, a global water utility company, and SES Power, a mobile power provider
Dr. Karim El Solh, Chief Executive Officer of Gulf Capital, commented: "The credit business is a very important part of Gulf Capital’s long-term growth plans and the IFC’s anchor investment is a strong vote of confidence in the Fund’s investment strategy. This third successful closing, particularly in a difficult fund raising environment, emphasises the appeal of this fund to investors looking for high cash-yielding investments and strong potential upside. On the lending side, our corporate customers will benefit significantly from the flexible financing solutions and innovative structures that Gulf Credit Partners and the credit fund will be able to deliver."
He added: "This successful fundraise is part of Gulf Capital’s long-term goal of increasing its overall assets under management and positioning itself as the premier alternative asset manager in the region. We are very pleased to have secured the backing of IFC and other leading credit investors in the region to back what is the largest credit fund in the Middle East and Turkey region."
Mr. Walid Cherif, Managing Director and co-Head of Gulf Credit Partners, added: "The shortage in regional liquidity is encouraging companies to seek new solutions to finance their growth plans. More sophisticated, cash-flow based lending is needed to meet those demands for capital. We are very delighted to have IFC on board with us as an investor. This investment will mean we can provide greater access to finance to entrepreneurs, who may otherwise find that the lack of financing impairs their ability to function and grow and contribute to the overall economy and job creation." He added: "We are also pleased to have helped the two companies already in our portfolio to achieve those goals with a bespoke financing solution for their needs. We are gratified by the level of support shown to us by leading global and regional investors."
Mr. Christopher Baines, Managing Director and co-Head of Gulf Credit Partners, added: "The strong start that Gulf Credit Partners has made to date is very encouraging. In addition to building a high quality portfolio of SME assets already in the fund and benefitting from a strong pipeline of future opportunities, we have also established a first class team of investment specialists and developed good working relationships with our regional stakeholders." He added that "this successful fundraise is a testament to the strong investor appetite for innovative high cash-yielding products. Investors have seen that a clear market opportunity exists for Gulf Credit Partners to fill the gap in growth capital and acquisition finance in the MENA and Turkish markets."
Gulf Credit Partners’ fund fills an acute gap in the market for MENA financing by offering credit solutions to corporate and private equity investors as they grow their businesses. The credit fund has already invested in a wide range of opportunities such as private equity-backed acquisitions and growth capital for companies where debt and mezzanine finance is an attractive alternative to equity. Investments in corporate loans and bonds will also be considered, thereby covering the entire debt spectrum. Unlike traditional asset-based lenders, the financing provided is based on the cash flows generated by the company. These financings are therefore very flexible, using various structures to meet borrowers’ needs including longer maturities and more deferred repayment dates of principal than those typically seen in traditional bank lending.