A Middle East equity fund set up by US firm Siguler Guff & Company and partly guaranteed by the Overseas Private Investment Corporation (OPIC) has raised more than half its $250 million target from investors since opening subscriptions three months ago.

Fund manager Mona Aboelnaga says the first stage of fund-raising, which has raised more than $125 million from US institutional investors, will close in October or November once documentation is complete. 'We want to get going and invest this money before the end of the year,' she says. The rest of the money will be raised in 1997.

The fund will make investments in unlisted companies in North Africa and the Levant over a 10-year period. Investors have to put 25 per cent of their money into the fund's equity: the other 75 per cent goes into notes with maturities of between six and 10 years which are priced at 75 basis points over the equivalent US treasury bills (MEED 5:7:96).

The unusual feature of the fund is that the notes are guaranteed by OPIC. In return, the fund will invest in Middle East companies which have some connection to US business - such as those that have US suppliers.

'[The OPIC guarantee] is a way of enticing investors into a part of the world where they wouldn't normally invest,' says Aboelnaga.

OPIC also imposes environmental stipulations on the fund's investments.