Citadel Capital Reports Third Quarter 2010 Results, Strong Rise in Assets Under Management

Strong rise in AUM, revenues and net profits as execution risk continues to narrow across the firm's 14-country, 15-industry footprint

(Cairo, Egypt) — 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 third quarter of 2010. The firm reported a 7.1% rise in total assets under management (AUM) to US$ 4.0 billion (EGP 23 billion) as it recognized US$ 265.4 million in new equity raised year-to-date. Third-party fee-earning AUM rose 6.0% to US$ 2.0 billion in the same period.

The US$ 265.4 million in new AUM includes US$ 140 million for the MENA and Africa Joint Investment Funds (JIFs) and US$ 100 million in financing from the US Overseas Private Investment Corporation (OPIC).

“With the start of operations at six greenfields so far this year, US$ 2.6 billion in debt signed for the Egyptian Refining Company and strong operational performance at other platforms, our execution risk continues to fall,” said Citadel Capital Chairman and Founder Ahmed Heikal. “This has not gone unnoticed by the regional investors who are our core LPs, nor by the sophisticated global institutional LPs that are looking to Citadel Capital to gain exposure to Africa’s highly promising markets. This momentum has fed straight into important new fundraising in the past quarter.”

The firm reported net income of US$ 3.2 million (EGP 18.4 million) on revenues of US$ 7.7 million (EGP 44.1 million) on a standalone basis, a strong rise from net earnings of US$ 0.05 million (EGP 0.29 million) in 2Q10.

Importantly, Citadel Capital reports a sharp narrowing of its consolidated loss in 3Q10 to US$ 5.1 million (EGP 29.6 million) compared with a net loss of US$ 16.5 million (EGP 94.8 million) the previous quarter, largely on the back of a completed turnaround at ARESCO, a key ASEC Holding Portfolio Company, and the start of operations at multiple greenfield projects.

In addition to notable equity fundraising in the quarter, 3Q10 also saw the signing of a US$ 2.6 billion debt financing package for the Egyptian Refining Company, Citadel Capital’s Platform Company in the Egyptian petroleum refining industry. Citadel Capital is working to finalize the arrangement of ERC’s equity package in the coming period.

“We believe that Citadel Capital’s fundraising year-to-date accounts for more than 27% of all private equity funds raised for investment in the MENA region in 2010 (according to figures from the Emerging Markets Private Equity Association),” said Heikal.

A large number of Citadel Capital’s 19 Platform Companies achieved significant milestones in the third quarter of 2010 which have contributed significantly to narrowing the firm’s execution risk.

ASEC Holding and its Portfolio Companies have secured US$200 million in syndicated financing for a new 2 million tons per annum (MTPA) greenfield cement plant in Egypt and reported the start of production at Takamol, its new greenfield plant in Sudan. After a considerable amount of time spent on restructuring, ARESCO, the group’s turnkey contractor, has secured a contract to build a cement plant in Assiyut, Egypt.

“We are strongly encouraged by ARESCO’s performance and we expect it to build a strong, profitable backlog for 2011 and 2012,” said Heikal.

In Agriculture and Consumer Foods, Platform Companies have engaged a new Chief Executive Offer (CEO) at Gozour, continued retail expansion, and increased yogurt production capacity in Egypt, all while gaining new milk market share. In Sudan, Wafra, Citadel Capital’s greenfield agriculture venture, has met new planting milestones with 2,000 feddans now under cultivation and a total of 20,000 set to enter cultivation by June 2011 across two Portfolio Companies.

In Transportation and Logistics, Africa Railway has raised its shareholding in Rift Valley Railways (RVRI) of Kenya and Uganda to 51% (from 35%), while Egyptian river transportation investments have taken delivery of their first custom-designed river cargo barges. RVRI has engaged new management including a new Chief Operating Officer, Chief Financial Officer and Sales and Marketing Director as well as engaged leading global rail consultant América Latina Logística.

“We believe that the opportunities offered by RVRI in the coming years are truly substantial,” said Heikal.

TAQA Arabia has won mandates for important power generation and distribution contracts in Yemen, Sinai and the Greater Cairo Area, while its gas division has added 48,500 new residential clients. Mandates are being negotiated to take TAQA Arabia to market via IPO in the first half of 2011, market conditions permitting.

ASCOM Portfolio Company APM reports significant progress at gold concessions in Ethiopia and Sudan. Newly operational greenfield ASCOM Technical Calcium Carbonate, in Minya, Egypt, is making steady progress and has made full use of its production capacity for the past three months running. A project to double its capacity at a price equal to 30% of the original investment cost is currently underway. Moreover, ASCOM’s new glasswool plant will enter production during 4Q10.

Finance Unlimited’s microfinance venture, Tanmeyah, has expanded its network in Egypt to 79 branches and its overall loan book to EGP 184.2 million. The company is now in talks to enter the promising Syrian market.

United Foundries Portfolio Company Alexandria Automotive Casting (AAC) has undergone a management change that is expected to improve the company’s performance significantly.

“Citadel Capital is encouraged by results in the first month after the change and expects AAC to turn profitable in 1Q11. A project to double AAC’s production capacity using already purchased and paid-for equipment will be complete in 2Q11,” said Heikal.

“We have also invested considerable effort throughout 2010 to begin institutionalizing our shareholder base. As of October 2010, institutional investors’ shareholding in Citadel Capital had risen seven-fold from the beginning of the year,” said Heikal. “We are also very proud that Crédit Suisse has become the first global investment bank to initiate coverage of Citadel Capital shares with a report issued in late October 2010.”

Full financials are available for download at

Note to Editors: Please click here to download the full 3Q10 Business Review, which includes summary financials as well as text and graphics explaining the total asset valuation methodology and a detailed analysis of performance in the quarter.

Third Quarter 2010 In Brief

I. Citadel Capital as a Principal Investor (Own Balance Sheet)

  • Total principal investments (including convertibles and interest-bearing loans to Platform Companies) stood at US$ 843.3 million (EGP 4.6 billion) at the end of 3Q10, a 3.6% rise from the previous quarter and a 5.3% rise year-to-date.
  • Equity investments by Citadel Capital as a principal investor in 3Q10 rose a net 1.4% to US$ 711.9 million (EGP 3.9 billion) quarter-on-quarter. The freeing up of funds from investments warehoused for the MENA and Africa Joint Investment Funds saw the firm re-direct equity to Tawazon (waste management) and Africa Railways under the MENA and Africa JIFs instead of reducing its principal investments in the same. Citadel Capital also made new direct principal investments in platforms including the Egyptian Refining Company (as management signed ERC’s debt package and is working to finalize arrangement of equity for the project in the coming period) and Wafra (Sudanese agriculture). Principal equity investments have risen by 14.1% YTD.
  • Interest bearing loans to Platform and Portfolio Companies have fallen 35.6%year-to-date to US$ 50.2 million (EGP 277.1 million). Loans temporarily rose 24.0% quarter-on-quarter due to an in-progress transaction. Excluding the temporary effect of this transaction, loans declined 21.9% quarter-on-quarter to US$ 31.4 million (EGP 173.2 million).
  • Convertibles in Platform and Portfolio Companies rose 13.7% to US$81.2 million (EGP 476.3 million) on the back of a previously planned investment in the ASEC Holding convertible.
  • Gains from the sale of principal investments were nil in 3Q10.

II. Asset Management Business

  • Total investments under control of Citadel Capital’s 19 Opportunity-Specific Funds rose 3.2% to US$ 8.6 billion (EGP 49.45 billion).
  • Total assets under management (committed) in Citadel Capital’s 19 Opportunity-Specific Funds (OSFs) and the MENA and Africa Joint Investment Funds rose 7.0% in 3Q10 to US$ 4.0 billion (EGP 23 billion) from the previous quarter, and 9.9% YTD. This rise signals strong LP interest in Citadel Capital’s business model and investments despite the prevailing global economic climate. Citadel Capital’s 3Q10 fundraising accounts for more than 27% of all equity raised for investment in the MENA region year-to-date, according to figures from the Emerging Markets Private Equity Association.
  • Total invested AUM rose 1.8% quarter-on-quarter to US$ 3.0 billion (EGP 17.25 billion) on the back of the gradual drawdown of funds from the JIFs and Citadel Capital’s rising principal investments in ERC and the ASEC Holding convertible, among others.
  • Total invested third-party AUM rose 1.1% in 3Q10 to US$2.2billion (EGP12.65billion), with new LP investments in the period dominated by funds drawn down from the MENA and Africa JIFs.
  • Total fee-earning AUM stood at US$ 2.0 billion (EGP 11.5 billion) at the end of 3Q10, a rise of 6.0% quarter-on-quarter and 6.5% year-to-date.
  • Revenue from advisory fees stood at over US$ 4.6 million (EGP 26.4 million), up 3.8% on the previous quarter as fee-earning AUM rose.
  • Revenue from Citadel Capital’s carried interest in its limited partners’ proceeds from exited or partially-exited investments was nil, as it was in 2Q10.

III. Financial Highlights

  • Citadel Capital revenue (standalone) in 3Q10 reached US$ 7.7 million (EGP 44.1 million), a 14.3% rise from US$ 6.7 million (EGP 38.5 million) the previous quarter, reflecting a rise in advisory fees and other operating revenues, the latter stemming largely from the recovery of pre-operational expenses defrayed at Platform Companies and SPVs. Citadel Capital revenues in 9M10 stand at US$ 21.7 million (EGP 124.8 million), a 29.7% dip from US$ 30.9 million (EGP 177.6 million) in the same period last year. Revenues in 9M09 reflect a one-time gain from the sale of an investment to a Citadel Capital Platform Company.
  • EBITDA for the three months ending 30 September 2010 stood at US$ 0.80 million (EGP 4.61 million) compared with a negative US$ 0.67 million (negative EGP 3.8 million) the previous quarter, an improvement (despite the lack of revenue from sale of investments) that reflects rising revenues and a decline in operating expenses as the payment of previously planned employee bonus compensation was completed at the end of 2Q10. EBITDA for 9M10 stood at negative US$ 1.8 million (negative EGP 10.4 million) compared with US$ 12.4 million (EGP 71.2 million) in the same period last year.
  • Net income after taxes (standalone) in 3Q10 was US$3.2million (EGP18.4million), up substantially from US$ 52,174 (EGP 0.3 million) the previous quarter on the back of both higher revenues and a rise in net interest income, with the latter primarily due to income from investments in convertibles. Citadel Capital earnings in 9M10 were US$ 3.5 million (EGP 20.2 million), down from US$ 10.6 million (EGP 60.9 million) in the same period last year.
  • Consolidated net income after taxes in 3Q10 improved strongly to a net loss of US$ 5.1 million (EGP 29.6 million) from a net loss of US$ 16.5 million (EGP 94.8 million) the previous quarter on the back of a turnaround at an important ASEC Holding Portfolio Company and the start of operations at key greenfields, among other factors.
  • Debt-to-equity ratio stood at 26% on 30 September 2010, against 22% at the end of 2Q10, reflecting the closure of an additional US$ 25 million in debt financing at the Citadel Capital level to support the planned pace and tenor of Citadel Capital principal investments. Across the firm’s platform investments, the average debt-to-equity ratio at the end of 9M10 stood at 73% (excluding Egyptian Refining Company and Citadel Capital itself) compared with 65% at the end of the first half.


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 19 OSFs now control Platform Companies with investments worth more than US$ 8.3 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

For more information, please contact:

Ms. Ghada Hammouda
Head of Corporate Communications
Citadel Capital (S.A.E.) (click to reveal this email)

Tel: +20 2 2791-4440 • Fax: +20 22 791-4448
Mobile: +20 16 662-0002