Thursday, Jan 11, 2007
BEIRUT (Zawya Dow Jones)--Lebanon's Byblos Bank SAL (BYB.LE) signed a commitment agreement Thursday with the European Investment Bank to set up a new private-equity investment company called Byblos Ventures to focus on small and medium-sized enterprises in Lebanon, Jordan, Syria and Egypt.
Byblos Ventures will launch formal investment activities in mid-2007, with an initial size of $20 million, although this may be boosted up to a maximum of $50 million within the company's investment phase.
Philippe de Fontaine Vive, vice-president in charge of EIB's Facility for Euro-Mediterranean Investment and Partnership, or Femip, told journalists at the signing of the agreement that the European bank has authorized participation in Byblos Ventures with investment of up to EUR7.5 million.
The EIB will limit its actual participation in the project's equity to 25%, according to Paul Chucrallah, assistant general manager for the Lebanese bank's Byblos Invest Bank subsidiary, which will initially manage Byblos Ventures.
Through various subsidiaries, Byblos Bank will contribute 50% to the equity of Byblos Ventures, with other institutional investors to provide the remaining 25%.
Chucrallah said another non-Lebanese institutional investor has already earmarked $5 million for participation in Byblos Ventures, although he added that it doesn't want to be named at present.
Byblos Ventures, which is the third private-equity venture launched in Beirut in the past 12 months, will invest in companies with a proven track record and with plans to increase production or expand into new markets.
Small and medium-sized enterprises are essential to economic growth in the Mediterranean, de Fontaine Vive said.
"We aim to invest more than 50% in Lebanon but that is not cast in iron. If we find great opportunities in the other three countries, we will go there," Chucrallah said.
Byblos Ventures will allocate no more than 40% of its investments to any given sector and will usually target individual spending in $1 million to $2 million tranches.
The company will seek to achieve internal rates of return upwards of 15% from its investments, depending on the type and size of the project.
"I will give a wide range of 15% to 30% but no less than 15%," said Chucrallah. "Returns of 30% will probably not be attainable because it needs more risk than we will want to accept," he added.
Byblos Ventures' investment phase should be concluded after three years, with a possible extension to five years. And the timeframe for the entire project is estimated at 10 to 12 years.
Even before the formal establishment of Byblos Ventures later this year, the new entity's financial team will be able to implement private-equity projects which will later become part of Byblos Ventures, Chucrallah said.
-By Thomas Schellen, Zawya Dow Jones; +961-1-985757; thomas@zawya.com
Copyright (c) 2007 ABQ Zawya Ltd.
(END) Dow Jones Newswires
January 11, 2007 09:26 ET (14:26 GMT)
