Cairo-based alternative asset manager Gulf Capital has secured $215 million in commitments from institutional investors for its first credit vehicle, Gulf Capital Credit Opportunities Fund, which it launched two years ago.
In addition to providing liquidity and growth capital to SMEs in the the Middle East and Turkey, the fund provides acquisition finance to private equity firms in the region, Gulf said in a statement confirming the latest close.
Gulf Capital’s debt-focused unit, Gulf Credit Partners, has already begun investing the fund.
The firm hopes to receive further commitments from blue-chip institutional investors and leading family offices in the Middles East, as well as institutional investors in the US and Europe. It hopes to hold a final close at its hard cap of $300 million by year end, according to a source close to the firm.
The International Finance Corporation (IFC), a member of the World Bank, made a cornerstone commitment of $20 million to the fund ahead of this third close. “More than half of small and medium businesses in the Middle East and North Africa don’t have access to credit,” said Aftab Ahmed, director of financial markets and private equity funds at the IFC. “IFC's investment in Gulf credit will facilitate the availability of much-needed mezzanine financing in the region to businesses.”
The fund will invest in private equity-backed acquisitions as well as providing growth capital for companies where debt and mezzanine finance is an attractive alternative to equity. It has a broad remit, able to invest in a variety of debt instruments including mezzanine , preferred equity , high yield debt, convertibles and other similar income producing debt securities and obligations.
Karim El Solh, chief executive of Gulf Capital, said the fund would lend to companies in various sectors including infrastructure, healthcare, education, and manufacturing.
“This third successful closing, particularly in a difficult fundraising environment, emphasises the appeal of this fund to investors looking for high cash-yielding investments and strong potential upside,” said El Solh. “On the lending side, our corporate customers will benefit significantly from the flexible financing solutions and innovative structures that Gulf Credit Partners (the credit-focused unit of Gulf Capital) and the credit fund will be able to deliver.”
Walid Cherif, managing director and co-head of Gulf Credit Partners, said he believed the shortage in regional liquidity would encourage companies to seek new solutions to finance their growth plans.
“More sophisticated, cashflow-based lending is needed to meet those demands for capital,” added Cherif. “The secured commitments 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, grow and contribute to the overall economy and job creation.”