Overview

Leveraging a two-decade-long track record of successful acquisitions, asset management, and exits, EFG Hermes Private Equity stands as a leading player in the MENA private equity space. The division invests in three key, growing sectors of the economy: renewables through Vortex Energy, Education through the Egypt Education Fund, and healthcare through Rx Healthcare Management. By employing a carefully crafted strategy refined over years of experience, the division strives to offer an asset configuration that guarantees exposure to the most attractive market opportunities while meeting its investors’ unique and evolving needs.

EFG Hermes’ Vortex Energy Platform was established in 2014 with a mandate to invest in renewable energy projects on behalf of long-term institutional investors. Since inception, Vortex Energy has completed the entire investment life cycle from origination, investment, and asset management to refinancing and divestment. Today, Vortex Energy is directly invested in a 365 MW UK solar PV portfolio managed by Beaufort, and in parallel assesses potential investments opportunities in renewable energy projects across Europe and the Americas.

The Rx Healthcare Management is a private equity investment management firm set up to address the growing demand for high-quality healthcare products and services across Egypt, MENA, and Africa. It invests in highly selective targets, with a clear growth trajectory across healthcare verticals, giving investors access to unique opportunities across the sector’s value chain.

EFG Hermes’ Egypt Education Fund, the division’s latest addition, was launched in 2018. The USD 133 million investment fund is part of a USD 300 million education platform built in exclusive partnership with Dubai-based GEMS Education, one of the world’s oldest and largest K-12 private education providers. Through this platform, EFG Hermes invests in Egypt’s K-12 private education sector, in line with the Firm’s commitment to invest in critical sectors of its home market.

Operational Highlights of 2019

Vortex

2019 was a pivotal year for EFG Hermes’ renewable energy-focused fund as the divestment process of Vortex I and Vortex II (Vortex Wind), which together held a 49% stake in a 998 MW pan-European portfolio, reached financial close at the end of March 2019. The portfolio divested included 56 operational wind farms with gross capacity of 998 MW spread across Spain, France, Portugal, and Belgium. The sale not only marks an important turning point for Vortex Energy, but also demonstrates EFG Hermes’s ability to acquire, manage, and exit renewable energy investments on a global scale. Vortex Energy is now embarking on a new chapter focusing on further investments in the sector and is looking to expand its geographical footprint to the Americas. The Vortex Platform continues to manage Vortex Solar, a 100% shareholder of a 365 MW solar PV farm in the UK. In 2019, Vortex Solar’s EBITDA reached GBP 39.1 million, with an EBITDA margin of 84.2%, surpassing budget assumptions by 16.5%.

RX Healthcare Management

In November 2019, Rx Healthcare Management announced the acquisition of a leading Egyptian medical solutions provider, United Pharma, through Nutritius Investment Holdings, a special purpose vehicle set up for the acquisition. Marking the platform’s first investment in the Egyptian pharmaceuticals space, the transaction offers a unique combination of superior returns, as well as the opportunity to invest responsibly in a critical sector that will have measurable impact on the wider economy. The transaction leaves EFG Hermes and United Pharma perfectly positioned to play a leading role in covering the substantial shortfall in the IV solutions and injectables market in Egypt, as well as the growing demand in neighboring markets. The acquisition attracted significant interest from prominent Egyptian and Gulf investors, with proceeds being used to expand the company’s product offering to cover generic categories in underserved therapeutic areas and ramp up production for IV products.

Egypt Education Fund

In June 2019, EFG Hermes completed the successful second closing of the Egypt Education Fund with commitments amounting to USD 24 million. This followed the fund’s first closing completed in December 2018, with commitments amounting to USD 109 million, and brings the fund’s total commitments to c. USD 133 million.

Later in the year, the fund continued expanding in the Egyptian market with a new investment signed in August 2019 to develop a new international school in the city of Rehab. The new facility is set to host more than 1,400 students, bringing the platform’s aggregated capacity to c. 9,000 students over five schools. In parallel, EFG Hermes and GEMS Education continued to strengthen the platform’s management team with multiple new key hires completed throughout the year. The core team building is expected to be finalized before year-end 2019 in anticipation of new strategic acquisitions to be completed over the next 12 months.

In December, the fund finalized its third investment in the Egyptian market through the acquisition of a majority stake in leading transport provider Option Travel. The deal will diversify and expand the platform’s service offering, providing transportation to its c.6,000 enrolled students, with plans for a roll-out to third-party schools at a later stage.

Key Financial Highlights of 2019

Revenues at the Private Equity division surged to EGP 341 million in 2019, a 133% Y-o-Y rise compared to the previous year.