Vantage Capital, Africa’s largest mezzanine fund manager, has provided $10 million in mezzanine debt funding to Egyptian private equity firm Compass Capital to acquire six Grade-A office buildings in East Cairo.
Compass Capital had said last month it has struck a bolt-on deal for office properties in Cairo. It is making the acquisition via an existing real estate company that owns and operates the Walk of Cairo, an outdoor retail boulevard in West Cairo.
The office buildings were acquired from Namaa for Development and Real Estate Investment, a private real estate developer and operator owned by the Sallam family. Located in the heart of New Cairo’s central business district, the properties have an aggregate gross leasable area of 47,200 square metres and are leased to multinationals including Nestlé, General Electric, Johnson & Johnson, Lafarge Cement and some large Egyptian companies.
Founded in 2010, Cairo-based Compass Capital has built a portfolio of investments across pharmaceuticals, financial services and real estate. The acquisition of office buildings will expand its estate portfolio.
“In the current capital raise, Vantage’s mezzanine debt has replaced our required equity contribution, which has enabled Compass to retain its existing equity stake in the real estate portfolio without injecting more cash,” said Tarek Abdel-Rahman, co-managing partner at Compass Capital.
David Kornik, partner at Vantage Capital, said that the real estate market in Egypt is “buoyant” and showing “robust growth”, notwithstanding the impact of the Covid-19 pandemic. “In particular, East and West Cairo have been expanding rapidly as residents move out of central Cairo to escape the congestion and improve their quality of life.”
Vantage Capital’s portfolio is spread across 11 countries in Africa. The latest transaction represents its 33rd investment across four mezzanine funds and the second investment into Egypt in as many years.
Last year, Vantage had provided $23 million of mezzanine debt funding to PickAlbatros Hotels in its maiden deal in Egypt.
Warren van der Merwe, managing partner at Vantage, said Egypt is a key target market for the firm as it looks to deploy its fourth mezzanine fund.
Vantage made its maiden bet from the fourth mezz fund in January. It invested ZAR430 million ($28.4 million) in Seaton Estates, a middle to upper-medium residential coastal development located in Kwa-Zulu Natal, South Africa.