MEDITERRANIA CAPITAL IV

Promoter – Financial Intermediary

SPECIAL PURPOSE ENTITY(IES)/FUND

Location

• Mediterranean Countries

Description

Equity participation of up to EUR 15 million in Mediterrania Capital IV, a generalist private equity fund targeting growth capital investments predominantly in small and medium-sized private companies located in North Africa.

Additionality and Impact

Through this operation, the EIB will be able to continue to support the growth and institutionalisation of an independent and well-reputed fund manager investing primarily in North Africa. Furthermore, the EIB will provide much needed equity risk capital to local enterprises that operate across various economic sectors. Access to finance - in particular equity finance - and managerial advice are among the most prevalent barriers for the growth of small and mid-sized companies. The provision of growth capital and managerial support through private equity funds has proven an effective strategy to overcome this market failure. By providing growth capital and managerial advice to local companies, the operation will contribute considerably to boosting enterprise capabilities and competitiveness through access to finance and improved skills.

 

Additionally, the EIB has played an important role throughout the Fund Manager's history and supported the team to become independent. As such, the EIB has become a point of reference for the fund manager. The EIB's commitment as part of the Fund's first closing is anticipated to support the fund raising and catalyse other investors in a difficult fund raising environment that has been exacerbated by the impact of the Covid-19 pandemic and the conflict in Ukraine. The EIB is expecting to continue to provide guidance to the fund manager on best market practice for international private equity firms and thus contribute further to its institutionalisation.

Lastly, the EIB had a strong involvement in structuring the proposal in line with most recent market standards for international private equity funds. The EIB negotiated terms that are anticipated to optimise the fund's commercial profile and strengthen alignment of interest.

Objectives

Key project objectives include supporting the development of the private sector, primarily in North Africa, by increasing access to risk capital for local small and medium-sized companies. The fund is the successor fund of Mediterrania Capital III, in which the EIB invested in 2017. The new fund will pursue a similar strategy building a diversified portfolio, leveraging on the strong team's knowledge and experience. The fund manager will aim to create value through a hands-on management approach, driving the growth and profitability of investee companies as well as enhancing environmental, social, and governance (ESG) standards.

Sector(s)

• Services - Financial and insurance activities

Proposed EIB finance (Approximate amount)

EUR 15 million

Total cost (Approximate amount)

EUR 350 million

Environmental aspects

The fund will operate in line with the EIB's environmental and social standards.

Procurement

N/A.

Status

Signed - 31/03/2023