43004 - LCP Fund II Cooperatief U.A.

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Summary of Investment Information

Project Number

43004

Company Name

LCP FUND II COOPERATIEF U.A.

Date SPI Disclosed

Nov 6, 2019

Country

Egypt, Arab Republic of

Region

Africa

Projected Board Date

Feb 21, 2020

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Dec 21, 2023

Department

Equity Portfolio Management

Industry

Funds

Previous Events

Approved : Feb 21, 2020
Signed : Jun 26, 2020
Invested : Oct 21, 2020

Sector

Growth Equity Fund

Project Description

The proposed project is an equity investment of up to US$25 million in LCP Fund II, L.P. (“Lorax II” or the “Fund”), a closed-end private equity fund targeting to raise US$250 million to invest in mid-cap companies with strong management teams and growth potential in Egypt and up to 20% in the other countries in the Middle East and North Africa.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	50.0

Development Impact

Project Outcomes: - Stakeholders - Access to growth capital for Fund investees: The Fund will provide access to growth capital by investing between US$15-50 million in 8-10 companies in Egypt. - Stakeholders - Increased investee growth: The Fund is expected to add value to its investee companies through a focus on operational value-add and improvement in governance and reporting. Contribution to Market Creation - Competitiveness: The Project is expected to increase private equity activity in Egypt.

- IFC Own Account Equity: IFC will provide long-term equity capital to help the Fund achieve its first close by December 2019, and ultimately its target size of US$250 million. - Resource Mobilization: IFC's commitment to the Fund will help catalyze fundraising from other investors to reach the target final size. - Knowledge, Innovation & Capacity Building: IFC's experience in Egypt will support the structuring and institutionalization of the Fund. - Standard Setting: Lorax will introduce environmental and social management systems (ESMS) to align with IFC's environmental and social (E&S) performance standards.

E&S Category Rationale / Risks and Mitigation

The project is categorized as FI 2 (medium risk) according to IFC's Policy on Environmental and Social Sustainability. A review of the Fund's pipeline and investment themes indicate that the fund will focus on Egyptian companies in diverse sectors such as digital solution, pharmaceuticals, food processing, manufacturing (leather), financial services, healthcare, and retail. All the potential investments are likely to entail limited to medium adverse E&S risk and impacts that are few in number, generally site-specific, largely reversible and can be readily addressed through mitigation measures. The Fund Manager will be required to conduct an E&S due diligence and monitor the target investments against the IFC Exclusion List, applicable E&S laws and regulations, and Performance Standards. Given the Fund’s focus sectors, the Fund is not expected to invest in companies involved in higher-risk activities that may include: (a) involuntary resettlement; (b) potential adverse impacts on Indigenous Peoples; (c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage; or (d) significant occupational health and safety risks. In addition, investments involving coal mining, coal-related activities and upstream oil and gas activities will be excluded from the Fund’s portfolio.

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
DSQ B.V.	Arab Republic of Egypt	X-XX - Other
ECC Holding B.V.	Arab Republic of Egypt	X-XX - Other
Lucky App B.V.	Arab Republic of Egypt	X-XX - Other
MNT Investments B.V.	Arab Republic of Egypt	X-XX - Other
DSquares Group	Egypt, Arab Republic of	X-XY- Other
ECC Group	Egypt, Arab Republic of	X-XY- Other
MNT-Halan	Egypt, Arab Republic of	O-CC- Finance Companies - Digital Finance [Project only]
MSS Holding	Egypt, Arab Republic of	O-ME- Online payments, ecommerce payments
Mylerz	Egypt, Arab Republic of	X-XY- Other
Rabbit	Egypt, Arab Republic of	F-AI- Other Food

Key issues associated with this investment relate primarily to the E&S risks of the potential investments, and the capacity and systems in place to manage these risks. The Fund has developed an Environmental and Social Management System (ESMS), has appointed an E&S officer, and has retained the services of an external consultant to support the E&S due diligence process. To mitigate the risks inherent in the project, the Fund Manager will be required to ensure ongoing capacity development for the E&S officer and the investment team and ensure the ongoing implementation of the ESMS to identify the applicable E&S risks of each sub-project and require corrective actions as needed to ensure that these risks are managed according to the Performance Standards and applicable national laws in line with IFC requirements. ; In addition, IFC will review the first three E&S due diligence reports prior to the Fund’s investment to support the implementation of the ESMS.

Contacts

For Inquiries About the Project, Contact

Lorax Capital Partners
Ashraf Zaki
Founder
+202 2735 7836
azaki@loraxcapitalpartners.com
1 El-Gabalayah Street, 7th Floor, Zamalek, Cairo, Egypt 11211
http://loraxcapitalpartners.com/

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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.

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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.

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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
Nominate officers	12/15/2019
Establish SEMS	12/15/2019
Staff Training	06/12/2020
ESDD - Submission of the E&S due diligence reports for first 3 investments for IFC review	01/31/2020

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