Euro-Med PE initiative
Initial reaction to news that the first conference bringing together private equity players from both sides of the Mediterranean will be held in Lyon in late May is not necessarily ‘why was this not done before?’ but ‘why is it being done at all?’
If private equity in Europe is seen as a relatively uncertain investment in North Africa and the Middle-east would appear to introduce a new paradigm for risk.
But French independent private equity investment group Siparex feels that it is worth pursuing and with regional private equity and venture capital associations it has formed the Euromed Capital Forum Association to organise the first Euro-Mediterranean Forum on Private Equity in Lyon on 26-27 May. And pension funds agree, a number having signed up to come.
The region’s more than 400m inhabitants represent 7% of the world's population and 15% of its wealth, although unevenly distributed. While the states of the Mediterranean’s southern and eastern shores have long been in chronic need of investment, they have recently undergone seminal changes, ranging from EU’s decision to open membership negotiations with Turkey, the emergence of a business-friendly government in Egypt to Algerian attempts to tout for tourists on CNN.
“This forum is based on the idea that relationships between the north and the south of the Mediterranean will increase,” says Euromed Capital Forum Association chairman and Siparex CEO Dominique Nouvellet. “First, three Mediterranean countries – France, Spain and Italy – account for one-third of the investment in Europe’s private equity sector. And one of the topics examined at the forum will be why there has been this development and whether this experience is transferable.”
The initiative is in line with the aims of the Barcelona Process, named after the location of the November 1995 EU summit that launched a regional partnership in the political, economic and social spheres aimed at fostering relations between an arc of countries stretching from Morocco to Turkey with the EU and with each other.
Governance is an issue, Nouvellet concedes, “There will be workshops dedicated to this, investors cannot invest in small or medium sized funds if there is not transparency. We will discuss how we in the northern part of the Mediterranean do these things and those in the south will outline the problems, traditions and legal aspects.
“But in private equity we have to be highly selective. If we can invest in 10 or 15 companies during the investment period it’s good, it’s not a mass financing.”
And Nouvellet is talking from experience. “Siparex has a track record in give advice to emerging markets,” he says. “For example, we managed two funds in Russia for the EBRD and we have had very positive experiences in Tunisia and Morocco with two private equity funds were we selected and trained people and have taken minority shareholdings in their management company.”
Israel with its US connections and its military-linked high technology sector is one of the most attractive areas, he says. “There will be important Israeli funds at the meeting and they will explain Israel in the venture capital area. There will also be Turkish managers and investors.”
And European and US pension funds have also shown an interest. “CalPERS and some Swedish, Norwegian and Danish pension funds will attend the conference,” says Nouvellet. “And we have seven or eight representatives of pension funds and institutional investors from the Gulf area. And that’s important because they are not only interested in the southern Mediterranean but also want to invest in Europe.”