InfraMed’s latest investment in Egypt

Press Release

InfraMed invests US $100m in ERC, the Egyptian Refining Company

14 June 2012 – InfraMed supports Egypt’s energy sector through its latest investment in the Egyptian Refining Company (“ERC”)

InfraMed has invested, through its wholly owned subsidiary InfraRev Holding, US$100m in Orient, a holding company with a majority position in ERC. This equity injection represents an effective ownership of 15.6% in Orient and in turn 7.5% in ERC.

The US$3.7bn state-of-the-art facility will purchase the fuel oil produced by the Cairo Oil Refinery Company (CORC) and process it further to produce over 4.1 million tons of refined products and high-quality oil derivatives per year, including more than 2.3 million tons of Euro V diesel (the cleanest-burning diesel fuel in the world). The project will be operated as a public-private partnership under a 25-year supply and off-take agreement with the Egyptian General Petroleum Corporation (EGPC), a government-owned company.

As an import substitution project, ERC will result in more than $300m of direct annual economic benefits to Egypt. Developed by Citadel Capital, a leading private equity firm in the Middle East and Africa, ERC will address the country’s growing demand for diesel and reduce its current level of imports by approximately 50%. ERC’s refining process will reduce the SO2 emissions by 186,000 tons annually, i.e. 29% of the country’s current emission level. The project will also create 10,000 jobs during its construction peak and 700 permanent employments during operation.

The Chairman of InfraMed, Franco Bassanini, noted that “The Fund is continuing its work. After the investment in the port of Iskenderun in Turkey last March, Inframed has taken another major step in one of the areas of greatest value-added for the infrastructure of the countries along the southern and eastern shores of the Mediterranean and for the international companies that operate there. The activity of the InfraMed Fund is focused on diversified long-term investments, generating substantial but not speculative IRRs, that can help foster the economic and social progress of the countries involved, while at the same time providing considerable support for general economic recovery”.

InfraMed CEO Frederic Ottavy stated, “Our sizeable investment at this moment is evidence of our confidence in Egypt’s future economic growth. InfraMed is an international investor with a commercial mandate and this is proof that our investment region offers attractive opportunities.”

Karim Moussa, Managing Director of EFG Hermes, one of InfraMed’s investors and the on-going investment adviser of InfraMed in Egypt, mentioned: “Egypt is in need of substantial investments to build and upgrade its infrastructure. The financial close of ERC is a major milestone for the development of the country’s energy sector. InfraMed’s investment in ERC underlines its strong commitment to Egypt.”

Ahmed Heikal, Chairman and Founder of Citadel Capital, noted, “The financial close of ERC with equity investment from InfraMed confirms to international investors and the global community that Egypt is open for business. ERC, which will deliver tangible social, economic and environmental benefits to Egypt, is a key component of Egypt’s energy security going forward. We are honoured to have InfraMed, the largest fund devoted to infrastructure in the Mediterranean, invest in this key Citadel Capital platform company.”

This project marks InfraMed’s second investment this year and their first investment in Egypt. The fund’s rapid commitment pace confirms that essential infrastructure projects remain a priority for countries in the Southern and Eastern Mediterranean region.

InfraMed is a long-term infrastructure investment fund with five institutional investors who together contributed €385m: Caisse des Dépôts et Consignations (CDC), Cassa Depositi e Prestiti (Cdp), the European Investment Bank (EIB), Caisse de Dépôt et de Gestion (CDG) in Morocco, and EFG Hermes in Egypt.

InfraMed’s transaction advisers on ERC included Clifford Chance and Al Kamel (legal), Mott MacDonald (technical) and Deloitte (tax and accounting).

With the assistance of its adviser Deloitte, InfraMed is currently fundraising a target close of c.€1bn.