The IFC joins Sphinx Private Equity Management and Grandview, Citadel Capital's small and mid-cap investment portfolio company, to finalize the debt and equity financing for the completion of environmentally-friendly paper mill that will create 850 jobs and ease Egypt's reliance on imports
Grandview Investment Holdings, a company managed by Sphinx Private Equity Management, announced today that the International Finance Corporation (IFC) is supporting job creation and reducing greenhouse gas emissions in Egypt by investing to complete the construction of a new paper mill, a project initiated by El Motaheda S.A.E., a subsidiary of Modern Shorouk for Printing and Packaging.
The IFC will contribute an equity investment of up to $10 million and a loan of up to $15.5 million to complete the building of the facility, which began two years ago. The mill, to be located 60 kilometers outside Cairo in the Sadat City industrial zone, will use recycled fiber from local waste paper to produce duplex board, which is used to make boxes for retail products.
"Sphinx has worked diligently with the IFC over a period of one year to finance the debt and equity for this project, which will satisfy regional demand for a critical product in the paper packaging industry," says Sphinx Private Equity Management Chairman Marianne Ghali. "We are extremely pleased that the IFC continues to support SMEs in Egypt. We view this as a very positive step as the SME sector will be of critical importance to the country at this unique moment in its economic development."
El Motaheda will create an estimated 300 direct manufacturing jobs and a further 550 indirect jobs through the collection and transport of wastepaper. In addition, availability of high-quality locally produced duplex will help replace imports, benefiting domestic and regional consumer goods companies and, ultimately, individual consumers.
"Our goal is to transform Egypt into a regional hub for the packaging industry, becoming the primary provider of high-quality packaging materials for multinationals and exporters alike," said Ibrahim El Moallem, Chairman of Modern Shorouk for Printing and Packaging.
"Central to our business proposition is leveraging Egypt's skilled labour force and key geographical locations," noted El Moallem. "We have grown remarkably in the past five years in part through the development and continuous training of our staff. On completion of the duplex project, we will be a fully-integrated packaging solutions provider for the region."
Grandview, which invests in small- and mid-cap opportunities in Egypt, joined forces in 2006 with Modern Shorouk for Printing and Packaging, one of the leading players in the field of paper, to create the National Printing Company, El Motaheda's parent company.
National Printing Company stands today as one of the largest converting and consumer-products printing houses in Egypt. Through key subsidiaries Modern Shorouk for Printing and El Baddar for Packages, the National Printing Company produces books, folded board boxes, corrugated boxes and sheets, laminated packaging, and paper cups and bags.
The expansion into the manufacturing of duplex paper comes as part Shorouk Group's vertical integration strategy.
Egypt produces an estimated 60,000 tons of solid waste each day, of which around 12,000 tons is paper, yet the country imports wastepaper and pulp for its paper-product industries. El-Motaheda mill and its domestic supply chain promise to significantly reduce the volume of discarded wastepaper and help eliminate carbon emissions from its decay.
"Grandview has pursued a strategy of investing in growth sectors where Egypt enjoys considerable competitive advantages. The fund's participation in this important project aims to provide value-added services to support regional expansion, financial structuring and improved corporate governance," added Ghali.
