Limited partners honor contractual commitments, seeing Citadel Capital add AUM in 1Q11 and attract new investment from international institutional LPs in the months since. Citadel Capital Board has approved EGP 1.05 billion rights issue to support its growth plans
Citadel Capital (CCAP.CA on the Egyptian Stock Exchange), the leading private equity firm in the Middle East and Africa, announced today its standalone financial results for the first quarter of 2011, reporting total assets under management of US$ 4.1 billion (EGP 24.4 billion) as the Firm added US$ 41.6 million (EGP 247.2 million) in new AUM despite the disruptions caused by recent regional events including the Egyptian Revolution.
“The post-Revolutionary period has not been easy. Citadel Capital is still in a cash-preservation posture, our previously planned IPOs remain postponed, and we continue to expect lower-than-usual fundraising momentum for the balance of the year,” noted Citadel Capital Chairman and Founder Ahmed Heikal. “That said, I note several developments that give us reason to ask whether cautious optimism may be in order, including the removal of my name from the list of individuals prohibited from traveling, regulatory approval to hold an EGM to vote on our proposed US$ 175 million rights issue, our receipt of a comfort letter from the Ministry of Petroleum for the Egyptian Refining Company, and our ranking as the largest private equity firm in Africa for the third year running.”
“Importantly, we are also very pleased with the performance of many of our key non-Egyptian investments. Rift Valley Railways, the national rail operator of Kenya and Uganda, has reported substantial operational improvements, from new tariffs and passenger lines to substantial reductions in turnaround times and rising freight volumes. In Sudan, Wafra has finished its first commercial wheat harvest and taken the crop to market at prices significantly above our forecast. In at least one case, a non-Egyptian investment has bolstered the performance of an Egyptian platform, as is the case with TAQA Arabia, which posted a substantial year-on-year rise in EBITDA despite conditions in Egypt thanks to its Sudanese Portfolio Company Berber for Electrical Power,” Heikal noted.
Management continues to monitor business developments at all 19 of the Firm’s platform companies, Heikal said, with a view to ensuring the businesses remain on track for their revised goals as set in the weeks after the Revolution.
“I note that our Firm remains entirely committed to all of its investments across the Middle East and Africa, as underscored by our decision to make US$ 18.4 million in new principal investments in the quarter just ended,” Heikal added.
As previously reported, Management has written down Citadel Capital’s principal investment in upstream oil and gas platform NOPC / Rally Energy Group by 100% owing to technical difficulties in bringing the asset’s substantial reserves into production. Similarly, the Firm’s investment in the National Petroleum Company (NPC) has been written-down by 50% owing to its substantial equity investment in NOPC / Rally.
This decision results in the impairment of fully US$ 1.7 million (EGP 10.2 million) in revenues from advisory fees related to these platforms in 1Q11; these impaired fees are recorded in the notes to the Firm’s audited statutory standalone financials, but are not recorded on the revenue line as revenue from advisory fees. Revenue from contractual advisory fees for the period stand at over US$ 4.4 million (EGP 26.1 million), including those impaired fees.
On a standalone basis, Citadel Capital accordingly reports a net loss of US$ 4.5 million (EGP 26.6 million) for 1Q11 on revenues of US$ 2.7 million (EGP 15.9 million). This compares with a net profit of US$ 0.25 million (EGP 1.5 million) in the same quarter of 2010.
“Adding nearly US$ 42 million in new AUM while in the midst of a Revolution is an accomplishment. Moreover, international institutional investors trusted Citadel Capital and its Platform Companies with a further US$ 46.5 million in the second quarter — including the IFC’s investment in a paper mill controlled by our mid-cap fund and a combined US$ 21 million in our Egyptian river transport investments from the European Investment Bank and German Investment Corporation (DEG) is even more telling,” Heikal concluded.
Highlights of 1Q11 include:
• Total assets under management Total AUM rose 2.5% quarter-on-quarter and 10.8% year-on-year to US$ 4.1 billion (EGP 24.4 billion) on the back of US$ 41.6 million (EGP 247.2 million) in new AUM in 1Q11 alone.
• Total principal investments (including convertibles and interest-bearing loans to its Platform Companies) stood at US$ 916.0 million (EGP 5.1 billion) at the end of 1Q11, a 2.1% rise from US$ 897.6 million (EGP 4.9 billion) the previous quarter and a 10.5% rise year-on-year.
• Citadel Capital made new principal equity investments of US$ 15.0 million (EGP 99.1 million) in 1Q11. Accordingly, the Firm’s total principal equity investments rose 2.4% quarter-on-quarter to US$ 771.9 million (EGP 4.2 billion).
• The majority of key developments at Platform Companies in the quarter were disclosed in the Firm’s FY10 Business Review. Accordingly, the below focuses on a handful of noteworthy developments arising after the release of the FY10 Business Review. These include a number of previously announced developments (details of which are available on the Citadel Capital website). Among them:
• The Nile Valley Petroleum Ltd. farm-out agreement: The agreement entitles NVPL to almost all of the US$ 73 million recoverable cost pool for Blocks 9 and 11 and US$ 10 million in cash in return for a 30% participating interest in the two blocks. The Platform Company will use this to fund its ongoing obligations, thereby easing the burden on Citadel Capital, which as lead shareholder had been funding NVPL’s monthly running costs including salaries, state entitlements and accrued payable.
• First commercial wheat harvest at Wafra in Sudan: The harvest netted prices significantly above budget and has prompted both an expanded fall planting and accelerated 2012 development plan.
• US$ 25.5 million agreement with the International Finance Corporation to finalize completion of Al-Motaheda’s paper mill: A significant vote of confidence in a key investment of Grandview, the firm’s mid-cap investment fund.
• Investments in Nile Logistics portfolio companies total US$ 21 million made by DEG and EIB, among others: A key international endorsement of the Platform Company’s fundamentals that will simultaneously allow a more rapid build-out of both fleet and ports.
Management’s discussion of operational performance as well as details of Citadel Capital’s 1Q11 standalone and consolidated financials are to be found in the full Business Review, available at www.citadelcapital.com.
Citadel Capital (CCAP.CA on the Egyptian Stock Exchange) is the leading private equity firm in the Middle East and Africa. Citadel Capital focuses on building regional platforms in select industries through acquisitions, turnarounds, and greenfields executed via Opportunity-Specific Funds. The firm’s OSFs control 19 Platform Companies with investments worth more than US$ 8.7 billion in 14 countries spanning 15 industries, including mining, cement, transportation, food and energy. Since 2004, Citadel Capital has generated more than US$ 2.5 billion in cash returns to its co-investors and shareholders (on investments of US$ 650 million), more than any other private equity firm in the region. Citadel Capital is the largest private equity firm in Africa by PE assets under management (2006-2011, as ranked by Private Equity International). For more information, please visit www.citadelcapital.com.
For more information, please contact:
Ms. Ghada Hammouda
Head of Corporate Communications
Citadel Capital (S.A.E.)
g...@qalaaholdings.com (click to reveal this email)
Tel: +20 2 2791-4440
Fax: +20 22 791-4448
Mobile: +20 16 662-0002