The ‘Lebanon Growth Capital Fund’ was launched on the first of December with a capital of $50 million. The fund will target local small and medium-sized businesses with high-growth and expansion potential.

Investors in the fund are: private equity manager Abraaj Capital group, global computer networking corporation, Cisco, and the European Investment Bank (EIB). Cisco has injected $7 million into the fund. The European Investment Bank (EIB) injected €5 million ($6.6 million). The rest of the equity was the input of Abraaj Capital. The equity at the first close (in November) was $30 million, it will reach the target of $50 million in early 2012.

The fund is part of the ‘Partnership for Lebanon’ initiative launched in 2006 by five US companies, including Cisco, to support long term economic growth in the country. The fund will be under the management of Riyada Enterprise Development (RED), fully-owned member of Abraaj Capital. RED is a $500 million investment platform dedicated to SMEs in the Middle East, North Africa, and South Asia.

Lebanon Growth Capital Fund will invest in around 15 of the fastest growing SMEs with the potential to expand into regional markets.

Elie Habib, Lebanon Country Manager at RED, said that the investments could be made in businesses from different sectors, including tourism, healthcare, transport, education, and fashion. “However, a minimum of between 30 and 40 percent of the fund’s equity would be dedicated to the Information and Communication Technology firms,” he said.
Habib also said that the fund has an allocation of up to ten percent to invest in newly-established enterprises (startups) with partially developed products or services that need funding.

Habib said that the fund has duration of eight years. It would inject cash into the designated enterprises so they could further grow, and then exit the investment through selling its stake.

The fund has already made its first investment in a Lebanese telecom provider firm.