Egypt's Naeem says to start $19 mln pre-IPO fund

CAIRO, June 18 (Reuters) - Naeem Holding (NAHO.CA), Egypt's second largest investment bank by market value, will start a 100 million Egyptian pound ($19 million) fund to buy stakes in firms planning public listings, its chief executive said on Wednesday.

The fund would buy stakes in up to eight companies in its first year ahead of their listing on Nilex, Egypt's stock exchange for small and medium sized companies, Hany Tawfik told reporters. Naeem would finish raising money for the fund by mid-July, he said.

"The growth for small-cap funds generally outperforms other funds," Tawfik said.

Egypt started Nilex last year to expand opportunities for financing smaller businesses but it was only this month that the first two companies listed on the exchange.

Companies with capital of between 500,000 pounds and 25 million pounds can list on the exchange.

Naeem, which said in May it expects to double its operating profit this year, also is planning to start a hedge fund and a fund to invest in gold, Tawfik said.

Naeem would seek to raise $100 million for both the hedge fund and the gold fund, which would each start investing before the end of December pending regulator approval, he said.

Egypt's stock market regulator has introduced rules that would allow trades akin to short-selling, which many hedge funds use to make money from the decline in price of a stock, Tawfik said. ($1 = 5.34 Egyptian pounds) (Writing by Will Rasmussen)