18-06-2012

EFG Hermes’ InfraMed invests $100M in the Egyptian Refining Company

InfraMed invests in landmark USD 3.7 billion refining project led by Citadel Capital that will halve Egypt’s diesel import requirements, result in more than USD 300 million in additional direct benefits to the state annually, and spur job creation

EFG Hermes, in partnership with InfraMed, is supporting Egypt’s energy sector through a substantial investment in the Egyptian Refining Company (“ERC”), a project developed by Cairo-based private equity firm Citadel Capital and which reached financial close on 14 June 2012.

InfraMed has invested, through its wholly owned subsidiary InfraRev Holding, USD 100 million in Orient Investment Properties Ltd., a holding company with a majority position in ERC. This equity injection represents an effective ownership of 15.6 percent in Orient and, in turn, 7.5 percent in ERC.

Karim Moussa, Managing Director of EFG Hermes, one of InfraMed’s investors and the on-going investment adviser of InfraMed in Egypt, noted, “Egypt is in need of substantial investments to build and upgrade its infrastructure. The financial close of ERC is a major milestone for the development of the country's energy sector. InfraMed's investment in ERC underlines its strong commitment to Egypt.”

Bakr Abdel-Wahab, Director of EFG Hermes, said “This transaction demonstrates our ability to originate and execute large and complex infrastructure deals in Egypt and the region. Further, it reinforces our position as a leading infrastructure player and investor, capable of partnering with key financial and industrial sponsors”.

The Egyptian Fund Management Group (EFMG), a fully owned subsidiary of EFG Hermes, is InfraMed’s Investment Advisor and Partner for all its infrastructure transaction in Egypt. This transaction demonstrates EFMG’s outstanding ability to originate, analyse and execute deals for InfraMed in Egypt, even during periods of market volatility.

The USD 3.7 billion state-of-the-art facility will purchase fuel oil produced by the Cairo Oil Refinery Company (CORC) and process it further to produce over 4.1 million tons of refined products and high-quality oil derivatives per year, including more than 2.3 million tons of Euro V diesel (the cleanest-burning diesel fuel in the world). The project will be operated as a public-private partnership under a 25-year supply and off-take agreement with the Egyptian General Petroleum Corporation (EGPC), a government-owned company.

As an import substitution project, ERC will result in more than USD 300 million of direct annual economic benefits to Egypt. Developed by Cairo-based Citadel Capital, ERC will reduce Egypt’s current level of diesel imports by approximately 50 percent and curb 29 percent of the country’s current sulfur dioxide emissions. The project will also create 10,000 jobs during its construction peak and 700 permanent employments during operation.

“ERC is more than one of Africa’s largest-ever project finance deals, it is also a transformative development for the Egyptian economy. The financial close of ERC with equity investment from InfraMed confirms to international investors and the global community that Egypt is open for business. The signal this sends is huge,” said Citadel Capital Founder and Chairman Ahmed Heikal, noting, “ERC is a key component of Egypt’s energy security going forward.”

Added Heikal, “We are delighted to deliver an investment that is part of the solution to a number of Egypt’s present-day challenges. ERC’s refining process will reduce the nation’s present-day SO2 emissions by 29.1% and will deliver projects with positive social impacts on Mostorod, where ERC is based, and the surrounding communities. We are honored to have InfraMed, the largest fund devoted to infrastructure investing in the Mediterranean, invest in this key Citadel Capital platform company.”

This project marks EFMG and InfraMed’s first investment in Egypt. It also marks InfraMed’s second investment this year, following its commitment to Iskendurum Port in Turkey, where it is supporting the construction of the largest container operations port in the Eastern Mediterranean under a 36-year concession.

Separately, investment funds managed by EFG Hermes, in a consortium alongside Mannai Corporation, recently acquired Damas, the largest jewelry retailer in the Arab world. The USD 445 million transaction was the first take-private transaction backed by a financial sponsor in the GCC.


InfraMed’s rapid commitment pace confirms that essential infrastructure projects remain a priority for Egypt and countries in the Southern and Eastern Mediterranean region. InfraMed, in partnership with EFG Hermes, aims to continue its support to the Egyptian economy with planned additional investments in essential infrastructure projects and assets over the coming years.

InfraMed is a long-term infrastructure investment fund with five institutional investors who together contributed €385m: Caisse des Dépôts et Consignations (CDC), Cassa Depositi e Prestiti (Cdp), the European Investment Bank (EIB), Caisse de Dépôt et de Gestion (CDG) in Morocco, and EFG Hermes in Egypt.

InfraMed’s transaction advisers on ERC included Clifford Chance and Al Kamel (legal), Mott MacDonald (technical) and Deloitte (tax and accounting).

With the assistance of its adviser Deloitte, InfraMed is currently fundraising with a target close of c.€1bn.