Egypt Education Fund oversubscribed with commitments of $119M: Hermes

CAIRO – 23 December 2018: EFG Hermes announced Egypt Education Fund focused on Egypt’s K-12 sector was oversubscribed with total commitments of $119 million in its first close, exceeding the initially targeted $50-100 million.

The company clarified that this fund, with investment value worth $150 million, is part of a $300 million education platform built in exclusive partnership with Dubai-based GEMS Education, one of the world’s oldest and largest K-12 private education providers.

It also stated that the oversubscribed capital was raised in just over six months and has seen strong interest from a diverse group of international investors, including high-net-worth individuals and institutional investors from Egypt, the GCC, and Southeast Asia.

According to the statement, the second close is expected to be completed in 2019, with the goal of raising additional $30 million in capital.

“The fund targets to deliver IRRs exceeding 25 percent for investors and to deploy, alongside GEMS, $300 million over the coming three years to develop a portfolio of 30 schools with a total capacity of 40,000 students,” the statement read.

The company also said that it holds talks with several global financial institutions expressing interest in subscribing to the remaining ticket.

“Our success in raising the substantial equity capital in a relatively short time demonstrates our ability to create innovative private equity products that cater to today’s investor demands. The education sector in Egypt is in dire need of major investments, and together with our best-in-class school operator, GEMS, we expect to make a strong impact in the industry and deliver attractive returns to our investors,” Head of Asset Management and Private Equity at EFG Hermes Karim Moussa said.

“Investors understand that when partnering with us they don’t just benefit from the investment expertise of our team and our ability to devise focused, structured investment vehicles, but can trust that the day-to-day running of the assets will be overseen by a world-class operator and leader in the sector,” Moussa added.

For his part, the fund manager at EFG Hermes Mohamed Khalifa said: “We continue to work closely with GEMS to build Egypt’s largest institutional education service provider and to create a meaningful impact on the schools we operate.”

“Our investment targets are quite ambitious, and we are currently pursuing multiple investment opportunities across the sector with an investment pipeline comprising over 20 schools,” Khalifa revealed.

In May, EFG Hermes in cooperation with GEMs signed an agreement with Talaat Moustafa Group Holding (TMG Holding) to acquire a portfolio of schools in a LE 1 billion ($58 million) investment.

The statement referred that EFG Hermes will funnel the acquired portfolio back to the platform in the coming weeks which will be 50/50 owned by the fund and GEMS.

Meanwhile, the Board of Directors of EFG Hermes agreed to seed $15 million to the fund as part of its strategy to support its growing private equity business.

“With private equity activity in Egypt ebbing over the last few years, the fund’s success underscores the firm’s commitment to supporting Egypt’s recovery after a period of subdued investment activity brining in good Foreign Direct Investment flow into one of Egypt’s most promising and socially important sectors,” it said.

EFG Hermes recorded consolidated profits of LE 767.16 million during the first nine months of 2018, compared to LE 1 billion during the same months of 2017.

Egyptian Financial Group Hermes Holding (EFG Hermes) is a public company, listed on the Egyptian Exchange (EGX) since February 1999.

It operates within the diversified financial sector focusing on investment banking and brokerage. It has 36 subsidiaries operating across the Caribbean, Northern Africa and Middle East. EFG Hermes is based in 6th of October, Egypt, and was established in January 1984.