Safron Corp. Seeks Deal Oasis in Mid East –

Furthering its private equity foray into the Middle East, Safron Corp. last month acquired a minority interest in Egypt’s largest telecommunications holding company, RASCOM Technologies, for an undisclosed amount.

The deal is the London firm’s third since holding a first close on its debut Middle East private equity fund in December that rounded up $35 million.

In March, Safron made a $17 million control investment in an undisclosed telecommunication company in Morocco that provides wireless telephony. One of Safron’s limited partners also co-invested in the company.

The firm’s first investment was in January, when it bought a 25% stake in Jumbo, Turkey’s largest producer of silver cutlery, for $5 million, according to Anthony Mallis, a managing director at Safron.

None of the transactions involved leverage, Mr. Mallis said, although bank debt likely will be used in future transactions.

Safron Partners I has eight limited partners, including private and institutional investors from the Middle East, as well as two North American L.P.s-Telecom Venture Group Ltd. and BT Alex. Brown & Co. Safron is contemplating raising a second fund with a target of $100 million or more.

Safron will invest in the wireless communications, financial services and light industry sectors throughout the Middle East, although Mr. Mallis said Safron would be focusing primarily on the economies of Morocco, Turkey and Egypt, which he described as having high growth rates and a low dependency on oil.

Mr. Mallis said, in spite of the “great amount of deal flow” in the Middle East, there is only scant interest among Western private equity firms in investing in the region. He said Middle Eastern companies prefer that Western investors have a local co-investor when conducting a private equity transaction.

The governments of most Middle Eastern countries are in the process of retreating from involvement in the private sector, Mr. Mallis said, and as a result, companies, many of which are family-run, now are going through restructurings. A new generation of Western-educated managers has taken the helm of corporations in the region and are looking to divest their companies of non-core businesses. Mr. Mallis said this is creating many investing opportunities.