37441 - GC Credit II

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Summary of Investment Information

Project Number

37441

Company Name

GC CREDIT OPPORTUNITIES FUND II, LP

Date SPI Disclosed

Dec 23, 2015

Country

Middle East, Pakistan, and Afg Region

Region

Middle East

Projected Board Date

Feb 26, 2016

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Dec 21, 2024

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : Feb 26, 2016
Signed : May 10, 2016
Invested : Aug 8, 2016

Sector

Mezzanine Fund

Project Description

The project consists of a US$25 million equity investment, not to exceed 20% of total commitments, in GC Credit Opportunities Fund II, L.P (the “Fund”). The Fund succeeds Gulf Capital Credit Opportunities Fund I, L.P. (“Fund I”) where IFC invested US$20 million in 2013 (project #32640). The Fund, sponsored by Gulf Capital Pvt. JSC (“Gulf Capital”), has a target size of US$250 million. First close has been achieved in Dec 2015. The Fund focuses on a diversified portfolio of debt instruments including, but not limited to, mezzanine instruments, preferred equity securities, high yield debt securities, convertible and other similar income producing securities and obligations in the Middle East and North Africa (“MENA”) region with a majority of the Investments expected to be made, directly or indirectly, in companies in the Levant, Turkey and Egypt, as well as in the Gulf Cooperation Council countries of Bahrain, Kuwait, Oman, Qatar, the Kingdom of Saudi Arabia and the United Arab Emirates. The Fund may also invest up to 30% of total commitments in companies that are headquartered, operate principally, or founded in Sub-Saharan Africa

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	25.0

Development Impact

- The Fund focuses on growth midcaps and SMEs, which lack access to financing especially growth capital. Only 20% of MENA SMEs have access to credit, one of the lowest in the World; - Credit and mezzanine funds in the region will provide additional and complementary sources of financing to the financial markets which are currently dominated by traditional commercial banks; - Focus on midcap and SMEs fosters job creation in a region where youth unemployment rate is at 24%; higher than any other region;

- Catalytic role: IFC's presence will help attract institutional and international commercial investors. - Demonstration Effect: IFC's continuing support for a follow on willl demonstrate to the market IFC's commitment to an existing client. - E&S Standards: IFC's continuing presence will help enhance the GP's capabilities in unsuring compliance to ESG principals. - Additional financing through co-investments: IFC can assist the investee companies by providing co-investment/debt financing to help them implement their growth plans.

E&S Category Rationale / Risks and Mitigation

This project has been classified as "Category FI-2" according to IFC's Environmental and Social Review Procedures as the majority of the Fund’s expected portfolio will likely comprise of investments in industries with medium environmental and social risks. Proposed portfolio consists of consumer goods (10 %), electrical equipment, appliances and components (10 %), finance and insurance (10 %), food and beverages (10 %), machinery and other goods (20 %), oil, gas and mining (15 %), telecommunications (10 %), wholesale and retail trade (15 %). While the majority of the fund's investments is expected to be in medium E&S risk categories, there might be provisionally high E&S risk investments, especially in oil, gas and mining sector.

In accordance with IFC's Access to Information Policy, IFC will periodically disclose the names, locations and sectors of sub-projects that have been supported by IFC investments through private equity funds, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of January 1, 2025.

Investee	Country Of Investment	Sector
Amiral/Sonker	Virgin Islands, British	E-BA - Oil and Gas Transport or Pipeline
CHO Group	Tunisia	A-AF - Fruits and Vegetables
Classic Fashion	Jordan	K-CB - Garment and Apparel (With Primary Textile Operations, Excluding Footwear)
Ison Xperiences	Mauritius	R-AC - Other Services (Including IT Enabled Services)
Primefuels	Tanzania	E-AE - Other (Including General Freight Trucking)
Waternet	Turkey	F-AI - Other Food
Amiral Holdings	Egypt, Arab Republic of	B-AB- Oil and Gas Production (Includes Development)
Carbon Holdings	Egypt, Arab Republic of	G-AA- Refineries and Crackers

The project consists of an equity investment, in Gulf Capital Credit Opportunities Fund II, L.P (“Fund II”), a mezzanine fund domiciled in Cayman Islands in its second closing. Fund II is a follow up on Gulf Capital Credit Opportunities Fund I, L.P. (“Fund I”) where IFC invested in 2012 (project #32640). First closing is expected in Q4 2015.

The key risks involved in this project are those relating to the Fund's investments and the ability of the Fund to undertake E&S due diligence (“ESDD”) in line with IFC’s policy requirements. The Fund has an Environmental and Social Management System ("ESMS") in place which is in line with IFC requirements, including IFC Exclusion List, National Laws and Regulations and IFC Performance Standards and nominated ESMS officer.

The main risks associated with the Fund’s investments in companies within the Relevant Industries are related to labor and working conditions, resource efficiency, pollution prevention, waste management as well as occupational health and safety risks, and community health, safety and security risks.

All of the above risks can be managed and/or mitigated by the Fund conducting adequate due diligence by providing ongoing training programs for the Fund's management. In addition, in order to support the implementation of the Fund’s ESMS, IFC will review the first three environmental and social due diligences ("ESDD") carried out on the first three investments of the Fund, as well as any Category A projects prior to the Fund’s investment in such projects.

Contacts

For Inquiries About the Project, Contact

For inquiries and comments about the project contact:
Walid Cherif
Managing Director & Head
Gulf Capital Credit Partners
T. +971 4 436 6801 | M. +971 50 854 9745
Al Fattan Currency House
Office 2802, Level 28, Tower 2
Dubai International Financial Center

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Fax: 202-974-4384

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Task Title & Description	Anticipated Completion Date
Staff Training	12/15/2015

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