Presentation by

1
Building Bridges
Presentation by Hany Al-Sonbaty Partner EFG-Herme
s Private Equity
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EFG-Hermes Group

• EFG-Hermes Group is the Arab worlds investment
  bank
• It is the regional pioneer in the fields of
  brokerage, asset management, mergers
  acquisitions and IPOs.
• The firm employs over 400 individuals in three
  main regional markets Egypt, Saudi and Emirates.

Over the past decade, EFG-Hermes has raised
around US 8 billion for its clients and advised
on more than US 12 billion worth of MA
transactions.
EFG-Hermes went public 1998 with a listing the
London and Cairo Stock Exchanges.
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EFG-Hermes Private Equity (EHPE)

• EHPE and its partners have pioneered VC in Egypt.
• ICT institutional investment leader, with three
  specialized funds (Egypt, Jordan and Middle
  East).

• EHPE is the private equity subsidiary of
  EFG-Hermes, Arab Worlds leading merchant bank.
• Today EFG-Hermes Private Equity manages five
  funds
• Total funds under management of over US 500
  million in over 100 companies, across 15 sectors
  of the MENA economy.
• Strategic focus on financial, real estate,
  tourism and petrochemical sectors
• Three of the five funds are tech specific
• US 100 million invested in tech related
  investments over the past 7 years.
• Our portfolios represent a significant portion of
  Egyptian private equity institutional
  investments.
• We have participated in the formation of some of
  the leading Egyptian ICT companies.

• With investments in
• Egypt
• Jordan
• Turkey
• Dubai
• Saudi

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Completing the Loop
National Plan
Linkage and Trust
Domestic Input Factors
A Long-term, Iterative Process
Local Companies
5
Improving macroeconomic environment
Exports and Total Debt (1998-2004)

• Improving macroeconomic environment in Egypt due
  to the reform process mainly focusing on
  improving the business environment.
• New Cabinet in June 2004
• Customs reform in September 2004
• Tax reform in June 2005.
• Re-invigorating the privatization process
• Results
• GDP growth of 4.1 in 04 and near 6 in 05 up
  from 3 in previous 3 years.
• A larger foreign direct investment pool of US3.8
  Billion mainly from privatization
• Current account at US2.9 Billion in 04 (3 of
  GDP)
• Net FX reserves reached US21 Billion by Sept.
  05 end
• Appreciation of the Egyptian pound against the US
  dollar Euro
• Phenomenal Stock market performance of 154 over
  last 12 month (CASE 30) on the back of record
  corporate profits.

CASE 30 Index
Source EHPE, CASE, Egypt 2005 report
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A decade of an improving Ecosystem
1996 1997 -Arento becomes Telecom Egypt -Bids
for mobile telephony infrastructure -Creation of
Egyptian Company for Mobil services -Bid for
second mobile operator. -Bid for two payphone
operators -Deregulation of VSAT equipment
reselling
1998 -Creation of Ministry of Communication and
IT -New telecommunication Act -Creation of
independent regulatory authority -Two mobile
operations -Two payphone operations -MobiNil IPO
1999 2000 -ICT Master Plan -Interactive voice
response services -Data Communication market
licensing -Independent BOD members for T.E -IT
Clubs, - MCIT Sponsored CIT Training
1996
1998
1997
1999
2000
2001
2002
2003
2004
2005
2004 2005 -Nile University -Broadband
initiatives -E-Heritage center (CULTNAT) -IPO of
Telecom Egypt

• 2001 2002
• -Cabinet approves New Telecommunication Act
• -T.E rebalancing
• -Issuance of third mobile License
• -Launch of Free Internet
• -Launch of Affordable PC initiative
• -New Telecommunication Act

2003 Pre-paid phone card licenses IPO of
Vodafone CIT Incubator fund sponsored by MCIT and
T.E
The combination of Governmental Initiatives and
private sector investment over the past \ decade
have dramatically improved the CIT business
environment or ecosystem
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Completing the Loop
National Plan
Linkage and Trust
Domestic Input Factors
A Long-term, Iterative Process

• Labour Force
• Infrastructure
• RD
• Financing
• Entrepreneurship

Local Companies
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Technology Development Fund

• Technology Development Fund
• 2004
• Overview
• A collaborative initiative by EFG-Hermes Private
  Equity and the Egyptian Ministry of CIT (MCIT).
• Employs a unique management concept which
  integrates financial, regulative and operational
  know-how.
• A venture capital fund supported by a separate
  professional venture development team
  Ideavelopers.
• Fund Characteristics
• Size L.E 50 million to be expanded to L.E 150
  to 200 million
• Investment focus Technology and technology
  driven entities
• Investment Range L.E 2 to 7 million.
• Portfolio Size 15 companies.
• Fees 3 of committed Capital
• 20 carry above 15 IRR
• Fund Manager

Creating a platform for promoting the
development of the CIT industry enabling it to
become a major contributor to Egypts
advancement, employment, exports and GDP growth

• This platform will focus on
• Creating value to shareholders
• Creating a focal point for innovation and free
  enterprise
• Fostering the development of local CIT companies.
• Promoting entrepreneurial spirit and developing
  human capital
• Regional expansion

Sponsors
Investors
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Entrepreneurial Development TDF Business Plan
Competition

• First ICT focused Business Plan Competition
• Sponsored by TDF
• Managed by Ideavelopers
• 300 applicant teams narrowed down to 25 finalists
• Judges were from within the industry itself
• Finalists were offered a series of workshops on
  how to develop business plans
• Principles of finance and accounting
• Market analysis
• Presentation skills
• 10 Teams were selected for The Finals
• 15 minute presentation
• Prizes
• L.E 120,000 shared by the three teams
• One year free rent at the Smart Village

• Special thanks to our external panel of judges.
• Dr. Mohammed Omran
• Dr. Hany Assal
• Dr. Ahmad Tantawy
• Mr. Karim Ramadan
• Mr. Tarek Mansour
• Mr. Cristophe Malherbe
• Dr. Sherif Kamel
• Mr. Hossam Megahed
• Mr. Wael Amin
• Dr. Hazim Abdel Azim
• Dr. Mohammed Reda

We envisage this to be a yearly event
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Completing the Loop
National Plan
Domestic Input Factors
Linkage and Trust
A Long-term, Iterative Process
Local Companies
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CIT industry growth
CIT Capital Investments (Billion LE)
IT Companies
CAGR 34
Source MCIT
Source GAFI
Over the past decade the CIT industry has
cemented its position as a high growth pillar of
the Egyptian economy
Telecommunication Revenues L.E 17
Billion Information Technology Revenues L.E 3
Billion Total ICT employment 35,000
Market Value of listed CIT Companies L.E 80
Billion
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Sample CIT Investments made by EHPE
Since 1999, EHPE is proud to have participated
in most of the leading ICT enterprises in Egypt
and the region including mobile and alternative
carriers, Internet service providers and IT
service providers.
Communication and Communication Equipment
Internet and Information Technology
Founders
Early Stage

• Over the past 6 years EHPE has invested more than
  US100 million in over 25 CIT companies in Egypt
  and the Middle East.

Late Stage
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Completing the Loop
National Plan
Linkage and Trust
Domestic Input Factors
A Long-term, Iterative Process

• Trade associations
• Expansion of local companies
• Fulfillment
• IP Protection
• The Diaspora
• Reversing the brain drain.

Local Companies
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The Egyptian CIT opportunity
Industry Segment
Investment Drivers Opportunities
Telecom Infrastructure Services

• Deregulation
• Growing demand
• More internet enabled services
• Broadband as a new dimension
• SMEs joining the revolution
• E-Services

• Paradigm shift in business models.
• Triple Quadruple play services.

Convergence

• Software Development
• Business Process Outsourcing.

Outsourcing

• Innovation Technology Transfer

• Improving technical skills
• Arabic specific technologies / applications.
• Joint Ventures.
• Reversing the Brain Drain.

Win-Win models for co-operation
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Thank You.

• Please feel free to visit
• www.efg-hermes.com
• www.techdevfund.com
• www.ideavelopers.com