The Cedar Oxygen (CO) initiative emerged during a dire economic and financial crisis that has overwhelmed Lebanon since the end of 2019.

The fund took shape in early 2020 as a private and independent alternative financing platform seeded by its founder Alexandre Harkous, a successful serial entrepreneur and an international co-founding team of experts.

Cedar Oxygen will act as a catalyst in promoting the “Made in Lebanon” brand and the Lebanese industrial sector globally by creating new export development opportunities in collaboration with the Association of Industrialists and other stakeholders.

Initially, its focus will be on manufacturers of value-add products in food processing, metal and electrical manufacturing, construction materials, chemicals, wood and furniture, mining, quarrying products, paper, printing and publishing, clothing and textiles, rubber and plastics, basic metals, containers and packaging, health and safety products.

Harkous, who is chairman and managing partner of Cedar Oxygen, which aims to help finance the manufacturing sector, and is expected to have a total funding capacity of over $2 billion per year, a significant portion of Lebanon’s annual import trading volume.

Speaking to Arabian Business, Harkous said: “Under the patronage of the Association of Lebanese Industrialists (ALI), Cedar Oxygen has received interest from over 40 industrialists to date. We have begun onboarding, due diligence, and credit underwriting process on all of the completed files using our proprietary digital platform.”

Talking about how much finance is available, Harkous added: “Cedar Oxygen has already been seeded with approximately $1 million and currently has $175 million invested in the fund.

We are targeting a minimum fund size of $750 million and have already engaged with a hand-selected group of stakeholders who are supportive of our initiative and wish to work with us to create a net positive impact on Lebanon’s economy and to work towards better conditions in our country.

"At the same time, we have begun an outreach to international financial institutions and endowments with historical ties and active commitments within Lebanon.”

Challenging situation

He told Arabian Business that the current situation in Lebanon is “challenging”, adding: “Our fundraising targets are ambitious but we’ve built a strong, experienced team, implemented a robust investment process, and developed a very attractive product for investors that includes a solid risk mitigation strategy that will help us convince impact funds to invest with us.

"Similarly, the underlying asset-class has its own unique appeal as transactions are short-term, tightly structured and not subject to market volatility.

Furthermore, as our portfolio will comprise assets from both exporters and non-exporters and use a variety of supply chain and receivables financing structures, there will be a natural diversification and hedge built into our portfolio’s risk profile.”

Regarding the fund’s anchor investment from the Central Bank of Lebanon, Harkous said: “In the light of the dire economic, financial and social situation that Lebanon has been plunged into since the end of 2019... Cedar Oxygen was selected by BDL and has been unanimously approved by its central council because we combine a robust trade finance and FX solution with a compelling technology-based platform, and proved capable of moving quickly on the project despite a very challenging environment.”

Cedar Oxygen will provide direct financing to Lebanese manufacturers in collaboration with a select number of Lebanese alpha banks, he added.

Harkous said the financing provided by Cedar Oxygen can be done in dollars and euros, adding: “Country risk is one of the many risks that we assess and monitor for each transaction. While national developments are meticulously monitored, in the area of trade finance, at the transaction level, many types of risks can be mitigated and often reside outside of the country. In all cases, our credit risk assessment is applied throughout the financial facility's life cycle.”

The company will also work only with groups that export to countries deemed safe and not under the UN and/or US embargo and sanctions, he told Arabian Business.

He said that Cedar's Beirut office escaped major damage in the port explosion on August 4.

Promoting the “Made in Lebanon” brand and the Lebanese industrial sector globally is a key objective, he said, adding that exporters will be able to get credit facilities up to 100 percent at competitive interest rates and access to liquidity in Lebanon by transferring funds from abroad to Lebanon at favourable market rates without risk or delay.