Sphinx Private Equity Management Signs US$ 25.5 Million Agreement to Finance Completion of Shorouk’s New Paper Mill

The IFC joins Sphinx Private Equity Management and Grandview, Citadel Capital's small and mid-cap investment portfolio company, to finalize the debt and equity financing for the completion of environmentally-friendly paper mill that will create 850 jobs and ease Egypt's reliance on imports

Grandview Investment Holdings, a company managed by Sphinx Private Equity Management, announced today that the International Finance Corporation (IFC) is supporting job creation and reducing greenhouse gas emissions in Egypt by investing to complete the construction of a new paper mill, a project initiated by El Motaheda S.A.E., a subsidiary of Modern Shorouk for Printing and Packaging.

The IFC will contribute an equity investment of up to $10 million and a loan of up to $15.5 million to complete the building of the facility, which began two years ago. The mill, to be located 60 kilometers outside Cairo in the Sadat City industrial zone, will use recycled fiber from local waste paper to produce duplex board, which is used to make boxes for retail products.

“Sphinx has worked diligently with the IFC over a period of one year to finance the debt and equity for this project, which will satisfy regional demand for a critical product in the paper packaging industry,” says Sphinx Private Equity Management Chairman Marianne Ghali. “We are extremely pleased that the IFC continues to support SMEs in Egypt. We view this as a very positive step as the SME sector will be of critical importance to the country at this unique moment in its economic development.”
El Motaheda will create an estimated 300 direct manufacturing jobs and a further 550 indirect jobs through the collection and transport of wastepaper. In addition, availability of high-quality locally produced duplex will help replace imports, benefiting domestic and regional consumer goods companies and, ultimately, individual consumers.

“Our goal is to transform Egypt into a regional hub for the packaging industry, becoming the primary provider of high-quality packaging materials for multinationals and exporters alike,” said Ibrahim El Moallem, Chairman of Modern Shorouk for Printing and Packaging.
“Central to our business proposition is leveraging Egypt’s skilled labour force and key geographical locations,” noted El Moallem. “We have grown remarkably in the past five years in part through the development and continuous training of our staff. On completion of the duplex project, we will be a fully-integrated packaging solutions provider for the region.”

Grandview, which invests in small- and mid-cap opportunities in Egypt, joined forces in 2006 with Modern Shorouk for Printing and Packaging, one of the leading players in the field of paper, to create the National Printing Company, El Motaheda’s parent company.
National Printing Company stands today as one of the largest converting and consumer-products printing houses in Egypt. Through key subsidiaries Modern Shorouk for Printing and El Baddar for Packages, the National Printing Company produces books, folded board boxes, corrugated boxes and sheets, laminated packaging, and paper cups and bags.

The expansion into the manufacturing of duplex paper comes as part Shorouk Group’s vertical integration strategy.

Egypt produces an estimated 60,000 tons of solid waste each day, of which around 12,000 tons is paper, yet the country imports wastepaper and pulp for its paper-product industries. El-Motaheda mill and its domestic supply chain promise to significantly reduce the volume of discarded wastepaper and help eliminate carbon emissions from its decay.

“Grandview has pursued a strategy of investing in growth sectors where Egypt enjoys considerable competitive advantages. The fund’s participation in this important project aims to provide value-added services to support regional expansion, financial structuring and improved corporate governance,” added Ghali.

—Ends—

Citadel Capital (CCAP.CA on the Egyptian Stock Exchange) is the leading private equity in the Middle East and Africa. Citadel Capital focuses on building regional platforms in select industries through acquisitions, turnarounds, and greenfields executed via Opportunity Specific Funds. Citadel Capital’s 19 OSFs now control Platform Companies with investments worth more than US$ 8.3 billion in 14 countries spanning 15 industries, including mining, cement, transportation, food and energy. Since 2004, the firm has generated more than US$ 2.5 billion in cash returns to its co-investors and shareholders (on investments of US$ 650 million), more than any other private equity firm in the region. Citadel Capital is the largest private equity firm in Africa by PE assets under management (2004-2010, as ranked by Private Equity International). For more information, please visit www.citadelcapital.com.

Sphinx Egypt is a private equity management company with extensive experience in the field of direct investment in medium-sized companies. The company currently has US$ 230 in assets under management. As a subsidiary of Citadel Capital, Sphinx leverages the group’s network, deal flow and knowledge of the equities market in the Egypt and the region.

IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in developing countries. We create opportunity for people to escape poverty and improve their lives. We do so by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development. In a time of global economic uncertainty, our new investments climbed to a record $18 billion in fiscal 2010. For more information, visit www.ifc.org.

For more information, please contact:

Ms. Ghada Hammouda
Head of Corporate Communications
Citadel Capital (S.A.E.)
g...@qalaaholdings.com (click to reveal this email)
Tel: +20 2 2791-4440 • Fax: +20 22 791-4448
Mobile: +20 16 662-0002