46722 - Mediterrania IV

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Summary of Investment Information

Project Number

46722

Company Name

MEDITERRANIA CAPITAL IV MID-CAP

Date SPI Disclosed

Nov 8, 2022

Country

North Africa and Horn of Africa Region

Region

Africa

Projected Board Date

Dec 15, 2022

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Apr 30, 2023

Department

Disruptive Technologies and Funds

Industry

Funds

Previous Events

Approved : Mar 6, 2023
Signed : Mar 31, 2023
Invested : Apr 26, 2023

Sector

Growth Equity Fund

Project Description

IFC is considering an investment of up to €20 million into Mediterrania Capital IV Mid-Cap, L.P. (“Fund”), a €350 million private equity fund making growth-stage investments in mid-cap companies in North Africa (Morocco, Algeria, Tunisia and Egypt), with an allocation of up to 25% to French-speaking Sub-Saharan Africa. The proposed investment is to be potentially considered alongside a co-investment envelope, the amount of which is yet to be decided. The Fund is registered as a limited partnership and it holds a Global Business License (“GBL”) from the Financial Services Commission of the Republic of Mauritius.

The Fund will seek to take majority or significant minority stakes, via €20-50 million tickets, in mid-cap companies that typically have strong performance, market positioning, growth prospects, potential for regional expansion, and good quality management backed by shareholders that are aligned to the Fund’s objectives. The Fund will seek to make 8-10 investments, focusing on four key sectors: healthcare, FMCG, financial services and manufacturing.

Associated Advisory Engagement

There are no advisory services associated with this engagement.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	47.74

Development Impact

The project-level outcomes are delivered through increasing access to equity and value creation for mid-cap companies in Morocco, Egypt, and Cote d’Ivoire, including supporting investees that are female-owned/led. Mediterrania is an experienced fund manager and will provide strategic and operational expertise to help investees streamline operations and scale up to become market leaders.

Market creation is delivered by strengthening the competitiveness of the PE market in Morocco, Egypt and Cote d’Ivoire. The project supports an experienced fund manager to raise a follow-on fund in the mid-cap market segment while attracting institutional investors to the markets. Beyond the project, the success of the Fund will demonstrate the viability of operating in these markets and attract new local fund managers to enter these markets.

IFC’s additionality is both financial and non-financial. Financial additionality consists of IFC's provision of equity as a part of the first close and bringing in institutional capital to help the fund manager achieve its fundraising target. The financial additionality is also supported by a co-investment envelope that will enable the Fund to attract more follow-on equity for its investees. Non-Financial additionality involves non-commercial risk mitigation, as IFC’s participation in the will provide comfort to other institutional investors, including commercial investors and DFIs looking to come in at the second close.

E&S Category Rationale / Risks and Mitigation

The project is categorized as FI 2 (medium risk) according to IFC's Sustainability Policy. This is a third repeat investment with the Fund Manager where IFC previously invested in Mediterranea Capital II in 2013 Mediterranea Capital III in 2016. Both Funds have a satisfactory E&S performance. The review of MC IV pipeline indicates the Fund will focus on mid-cap companies in Egypt, Morocco, and Sub-Saharan Africa, mainly in the sectors of Financial Services, Pharmaceuticals, Sport Apparel, Education, Telecom, Manufacturing, Services and Retail, Agribusiness including cheese manufacturing and herbs & spices. 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. 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. To mitigate the risks inherent in the project, the Fund Manager will be required to update the existing ESMS, 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 IFC's applicable E&S 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. The Fund will not invest in any coal-related activities, or higher risk business 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. IFC's applicable E&S requirements for this project will be the Exclusion List, the host country laws and regulations and the IFC's Performance Standards.

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
Biopharm	Algeria	G-FA- Pharmaceuticals and Medicine Manufacturing
Cash Plus	Morocco	O-MA- Money transfer, remittances
Laprophan	Morocco	G-FA- Pharmaceuticals and Medicine Manufacturing

MCP has developed an ESMS updated in 2022, which includes procedures to address and manage the potential E&S risks of its existing investments in line with IFC's applicable E&S requirements. MCP has an appointed E&S officer with adequate capacity. The Fund's ESMS includes an E&S policy to be applied to all investments, and identifies as applicable requirements the Exclusion List, host country laws and regulations and the IFC Performance Standards. The ESMS also provides an overview of the Environmental and Social due diligence (ESDD) procedure to be followed and the implementation procedures including screening process, risk categorization, E&S corrective action plans for investee companies, as well as monitoring and reporting procedures. The Fund has also developed an external communication mechanism to address the public queries and concerns related to the Fund's investments. The Fund Manager will be required to: (i) revise and update the ESMS of the Fund to include guidelines and procedures on screening E&S risks and the categorization for Financial Intermediaries (FIs). In addition the updated ESMS will include procedures for supply chain risks screening and management; (ii) reinforce the E&S capacity and additional trainings; (iii) 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 in line with IFC's requirements.

Contacts

For Inquiries About the Project, Contact

Mediterrania Capital Partners
Albert Alsina
Founding Partner and CEO

aalsina@mcapitalp.com

www.mcapitalp.com

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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.

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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
Establish SEMS	12/31/2022
Staff Training	12/31/2022

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