In North Africa, there’s more reason for optimism among the entrepreneurship community today. Abraaj Capital’s recent acquisition of the North African private equity business of global asset manager Amundi has confirmed that, despite recent instabilities, opportunities are expanding for growth companies in the Maghreb.
As Dubai-headquartered private equity firm Abraaj acquires Amundi’s stake in the $161 million SGAM Al Kantara Fund, its mandate to invest $500 million in small and medium enterprises (SMEs) in the region will expand. After absorbing Kantara’s investment team and five existing investments, Abraaj plans to make 6-8 new investments in the next 12-18 months through the Kantara Fund, said Tom Speechley, Senior Partner at Abraaj Capital and CEO of its SME-focused arm, Riyada Enterprise Development (RED).
The move, which demonstrates Abraaj’s commitment to unlocking the economic potential of the Maghreb, was serendipitous, he noted. “Abraaj has been looking to establish an on-the-ground presence in the Maghreb, as part of our new focus on SMEs under RED. This is part of a larger strategy of expanding our footprint and using the best available local talent while looking further afield.” He affirmed that the revolution and relative instability in Tunisia and the Maghreb recently will not impede RED’s investment, as Abraaj takes a long-term investment view.
An added bonus is that the merger will create greater value for portfolio companies, due to synergies between Kantara’s and RED’s investment strategies. Abraaj will be able to enhance value by linking companies to each other, for instance, connecting a production company in one portfolio with a distribution company in another. “There are 3 or 4 cases in which we can immediately make value-added introductions,” said Speechley.
The move marks a bold statement from Abraaj that North Africa is ripe for investment. Hopefully, enhanced connections across the region will create new markets for SMEs in North Africa, enhance general deal flow, and further affirm to entrepreneurs that support is flooding into the post-revolution environment.