Target Information

Eagle Chemicals, founded in 1958, is a leading manufacturer of resin and polymer products in Egypt, recognized as a market leader across Africa. The company offers a diverse product range consisting of over 30 categories, including alkyds, solvent-based acrylics, saturated and unsaturated polyester resins, and water-based emulsion binders. With four modern factories and a tank farm situated in Egypt, Eagle Chemicals employs approximately 700 individuals and exports its products to over 80 countries across Africa, Asia, South America, and Europe.

Since 2014, when 8 Miles LLP invested in the company, Eagle Chemicals has experienced significant growth. Production capacity has increased more than 2.5 times, escalating from 85,000 MT in 2014 to over 215,000 MT in 2020. Concurrently, both revenue and EBITDA have more than doubled, and the company has made strides in enhancing governance, expanding its product offerings, and widening its global customer base.

Industry Overview in Egypt

The chemical industry in Egypt has witnessed a steady expansion, driven by increased demand for plastics and resin products in various sectors, including construction, automotive, and packaging. The government has made substantial investments to modernize its chemical manufacturing processes, aiming to boost exports and reduce dependency on imports. Egypt's chemical sector benefits from its strategic location, providing access to key markets in Europe, Asia, and Africa.

With a growing population and expanding economy, the demand for chemical products is expected to rise. Industry players are focusing on innovation and sustainability to meet consumer preferences for environmentally friendly products. This shift leads to increased R&D investments, contributing to advancements in production technology and the development of new chemical products.

Accessibility to raw materials, particularly from the Suez Canal and local petrochemical plants, bolsters Egypt's position as a competitive player in the global chemical industry. The government continues to facilitate the establishment of free trade zones and investment incentives, enhancing the ecosystem for chemical manufacturers.

Furthermore, Egypt's commitment to international trade agreements and partnerships plays a crucial role in the growth trajectory of the chemical industry. Such initiatives promote collaboration among local manufacturers and international investors, fostering a conducive environment for business expansion.

Rationale Behind the Deal

The decision by 8 Miles LLP to exit its minority stake in Eagle Chemicals to a consortium comprised of Ezdehar and FMO aligns with the firm's strategic objective to realize value from successful investments. Over the course of their partnership, 8 Miles has supported Eagle Chemicals in establishing a robust foundation for future growth, reflecting the potential for continued expansion and profitability in the Egyptian market.

The exit also demonstrates the success of 8 Miles' investment strategy, showcasing its ability to identify growth opportunities within the African private equity landscape. The transaction enables new investors to further capitalize on Eagle Chemicals' market position and the projected growth of the Egyptian chemical industry.

Investor Information

8 Miles LLP is a notable pan-African private equity firm, dedicated to investing in transformative businesses across Africa. Established by a team of experienced investment professionals, 8 Miles focuses on sectors poised for growth and long-term value creation. The firm has made a name for itself by partnering with high-potential companies, enhancing their operational efficiency, and promoting sustainable development within the region.

Ezdehar and FMO, the consortium acquiring Eagle Chemicals, are well-regarded for their commitment to investing in healthy and sustainable businesses. Their combined expertise and resources will significantly contribute to the ongoing success and competitive positioning of Eagle Chemicals in the market.

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The exit from Eagle Chemicals by 8 Miles LLP is perceived as a strategic move, capitalizing on the substantial growth achieved during their investment period. Given Eagle Chemicals' robust production capacity, established market presence, and strong governance practices, this transaction is likely a good investment for the consortium. They inherit a well-managed firm that faces promising growth prospects amid an expanding Egyptian chemical industry.

The industry outlook remains positive, particularly as the demand for chemical products is set to rise domestically and internationally due to economic growth and increased infrastructure investments. This environment offers the new investors opportunities for continued revenue generation and market expansion.

Additionally, with the government fostering an investment-friendly landscape, the consortium is likely to benefit from reduced operational risks and enhanced access to resources. They can leverage existing relationships and identify new avenues for further growth.

Overall, this deal appears to be advantageous, not only for the exiting investor but also for the incoming consortium, as they are poised to steer Eagle Chemicals through its next phase of development while benefitting from the firm’s established reputation in the sector.

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