Citadel Capital, the leading private equity firm in the Middle East and North Africa controlling investments of more than $8.3 billion, announced on Thursday its entry into the microfinance sector with the establishment of a new portfolio company, Tanmeyah. The investment in Tanmeyah will be made through Finance Unlimited, the firm's platform company for investments in the regional financial services sector. Tanmeyah will help thousands of small business owners and low-to-middle income entrepreneurs gain access to loans and financial services that would otherwise be unavailable to them through conventional banking offerings. “There is a large unmet demand for microfinance services in Egypt. Traditionally, commercial banks have been reluctant to venture into the area of micro lending because it was an operationally challenging endeavor that required specialized credit assessment skills that were not available in the local market. We see a clear opportunity for Tanmeyah to come in and fill the void,” said Citadel Capital Managing Director Ahmed El Houssieny. “We believe it will be a profitable venture that fills a market niche, and at the same time, it will catalyze Egypt's economic development as it avails financing to individuals and sectors to which financing was previously non-existent.” Finance Unlimited will own a 51 percent stake in Tanmeyah, with the balance of the shares divided between the company's management (25 percent) and the Egyptian Gulf Bank (EGB, 24 percent). The management team is made up of industry veterans, Amr Abouesh, who spearheaded Banque du Caire's micro financing initiative, Amr Abouelazm, who was previously with the German Development Bank (KfW) and Hazim Medani, the former chief operating officer at Bank of Alexandria and director of the bank's restructuring programs. Tanmeyah is currently finalizing an agreement with EGB to avail up to EGP 480 million for the company's on-lending program. Amr Abouesh, executive chairman of Tanmeyah, said “the model that Tanmeyah will be using will be a bit different from other microfinance schemes that are currently available in Egypt through NGOs and donor agencies. The entrepreneurs are required to have completed at least one year in their business cycle before they can qualify for a loan, which means that we will not be financing start-ups.” Loans will generally be issued to qualified business owners within five days of credit approval with a minimum loan size of EGP4,000 and a maximum of EGP 35,000. The nature of the micro credit scheme requires that loans be short in duration with a typical repayment cycle of four months to one year.
