Citadel Capital SAE Sees Tough Times Ahead — and Substantial Opportunities — for Africa and the Arab World

At the IFC's annual gathering of international private equity leaders in Washington, DC Citadel Capital SAE says that the global competitiveness of the Arab world's most diverse economy is set to rise in the long term

The strong economic fundamentals that saw the Middle East and Africa outpace global growth during the financial crisis of 2008-09 will only be further enhanced in the long term by democratic reforms in the Arab world, the Middle East and Africa’s leading private equity firm told an international gathering of private equity heavyweights at the IFC’s 13th annual Global Private Equity Conference held in association with the Emerging Markets Private Equity Association (EMPEA).

“There will absolutely be a slowdown in private equity fundraising for the Middle East and North Africa as economic growth eases and perceptions of political uncertainty rise in light of still-unfolding events across the region,” said Hisham El-Khazindar, Managing Director and Co-Founder of Citadel Capital SAE (CCAP.CA on the Egyptian Exchange), the leading private equity firm in the Middle East and Africa with US$ 8.6 billion in investments under control spanning 14 countries and 15 industries.

“That said, we see Sub-Saharan Africa as being largely unaffected by events and growing strongly this year,” noted El-Khazindar, whose firm’s investment footprint includes Kenya, Uganda, Ethiopia and Sudan, among other African nations. “Moreover, the global competitiveness of the MENA countries — particularly Egypt, the region’s most diverse economy and a natural global export and manufacturing hub — will only rise as long-term political risk is mitigated by the emergence of greater democracy. In this respect, nations such as Egypt and Tunisia are ahead of their peers by virtue of starting on the reform track sooner, while Qatar and the United Arab Emirates stand as beacons of stability in the Gulf.”

At the two-day conference that brought together key industry players from around the world for high-level discussions and debates, Citadel Capital SAE participated in a panel on ‘Adapting to a New Investment Climate in Emerging Markets Private Equity.’

“In our case, I believe the story is quite clear: A year and a half of careful attention to minimizing execution risk in 2009-10 has placed our platform investments on a solid footing to weather the short-term economic fallout from recent events. We have postponed planned exits for 12-18 months. It is not a case of value destruction, but of delayed realizations. Against that backdrop, we have spent a great deal of time since the start of the Egyptian Revolution on cost-control and capital-preservation plans at the firm and portfolio company levels without cutting so deep as to curtail our ability to respond to the substantial opportunities for distressed investing we think we will see starting later this year,” El-Khazindar said.

“Popular uprisings in the MENA region are detrimental to short-term market conditions, but the medium and longer term benefits of the Arab Spring leave many investors, including me, hopeful. When we look carefully at the data we see a possibly counterintuitive fact: Democracies consistently outperform autocracies in the developing world. Real democracies are resilient — they evolve with changing conditions, respond to challenges and encourage individual engagement in society and business. Sustainable returns on investment are not earned by cronyism or corruption, but by building viable businesses. Citadel Capital SAE has always had the sense that the market ‘voted’ on whether to support our businesses or those of our competitors. Now politics is catching up, and we believe that this better alignment will be supportive to our businesses and to the country.”

—Ends—

Citadel Capital SAE (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 21 OSFs now control 19 Platform Companies with investments worth more than US$ 8.6 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 (2005-2010, 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 2791-4439 • Fax: +20 22 791-4448
Mobile: +20 16 662-0002