Karnak Investment Fund Makes USD 21.7 Million Exit

Karnak led consortium completes exit from local electric cables manufacturer with a strategic sale to Spain’s General Cable

September 21, 2010

Karnak Investment Fund (KIF), a fund managed through Sphinx Egypt, together with its partner Mansour and Maghrabi Investment & Development (MMID) have announced today the sale of their interest in BICC Egypt (BICC), a medium-sized producer of low voltage (LV) cables. The announcement comes in connection with the signing of the Share Purchase Agreement for the sale of 100% of BICC to General Cable Spain, an affiliate of the US-based General Cable Corporation in a deal valued at USD 21.7 million.

“We are proud to have built a distinguished name in the wire and cable industry. As a result of these efforts, we are pleased to announce that we were able to achieve a positive return on our investment with net IRR at 38% despite the very difficult market conditions,” commented Marianne Ghali, Managing Director of Sphinx Egypt.

In February 2005, Ghali, a private equity (PE) industry veteran and Fund Manager of KIF, orchestrated a transaction and led a consortium with MMID and Mr. Alaa El Kawaja to acquire 100% of BICC Egypt from NSGB, the creditor bank that had seized BICC’s equity and assets. Ghali negotiated a solid deal at a price that reflected the distressed condition of the company. The aim was to turnaround the investment into a successful performing asset. Today, the KIF led consortium achieved its goal, culminating in the sale of BICC to General Cable Corporation.

“When we acquired BICC its capital structure was overburdened with EGP 115 million in debt, EGP 130 million in cumulative net losses and negative EGP 86 million in net worth,” said Ghali. “Revenues were at approximately EGP 9 million and market share was consistently declining to less than 1%. There’s no doubt that it was a tough call to have bet against the odds in a market controlled by regional giant Elsewedy Cables,” she adds

But Ghali’s investment rationale was a simple one based on the solid assumption that the macro economic reforms that were being introduced by Egypt’s new government would spur demand for electric cables in the construction and industrial sectors.

“When you couple this new demand with a hands on management package that includes both operational improvements and financial restructuring to turnaround the investment, you come up with a winning formula,” says Ghali.  

While KIF held BICC, turnover grew 16 times to over EGP 165 million, margins consistently beat international industry averages and market share in the low voltage cables segment grew to approximately 12% primarily in Egypt. Since acquisition, BICC has achieved cumulative profits in excess of EGP 65 million and restored positive equity without any capital increases.

“By 2009 we knew that we had created value and that the company was ready for additional growth with a new strategic owner that had the capability to increase capacity and introduce new product lines such as medium and high voltage cables,” explained Ghali.

According to Ghali, General Cable, the final buyer, was preferred over other strategic local players because, “Our core belief as a PE firm is that our role extends beyond exits and profitability. We have a responsibility to deliver the investment to the acquirer that will best preserve and grow its value. General Cable was just that suitor. As a global leader in the cable industry they have the scale and intellectual property to grow and develop this business in its local markets and create a production hub for regional exports.”

Commenting on the news, Ahmed Farouk, senior associate at KIF and a member of the transaction team says, “From acquisition to exit BICC exemplifies a successful private equity deal. The acquisition was timely, the price was reasonable given the potential we saw in the macroeconomic outlook and the restructuring and value creation process was carried out flawlessly.”

“It was not an easy process given the tough timing amid the global financial meltdown that led to a halt in cross-border M&A activity,” says Farouk. “But it has been very rewarding to see our efforts with BICC recognized.”

Commenting on the exit, BICC’s Chairman and CEO, Naguib Karass, who will remain with the company under the new ownership, explained that, “the Karnak-led consortium has been an important catalyst for growth.” 

“Their expertise as a market leader in midcap buyouts and restructuring proved to be a differentiating factor as they assisted management in building the business in areas of financial and strategic planning as well as executive recruitment. Without question, our goals for BICC were achieved far more quickly than we ever imagined,” said Karass.


Sphinx Egypt is a Cairo based private equity firm with over USD 250 million in funds under management. Sphinx was established in 2004 by Citadel Capital, the leading private equity firm in the Middle East and Africa with Marianne Ghali for the purpose of managing mid cap buyout funds in Egypt. Today Sphinx manages the Grandview Investment Holdings Fund and the Sphinx Turnaround fund sponsored by the IFC and the European Investment Bank. Additionally, the Sphinx team manages the Karnak Investment Fund and the University Educational Endowment Funds through Citadel Capital portfolio company Pharos.

General Cable (NYSE:BGC), headquartered in Highland Heights, Kentucky, is a leader in the development, design, manufacture, marketing and distribution of copper, aluminum and fiber optic wire and cable products for the numerous industries. The company's key competitive strengths  include product diversity, brand recognition, serviceability and operating efficiency.