The founder of the leading private equity firm in the Middle East and Africa tells a top industry gathering in London Western institutional investors and global SWFs seeking outsized returns must look to Africa
Global investors seeking outsized returns need to stop following the herd and look to Africa as the next great frontier, the founder of the leading private equity firm in the Middle East and Africa told industry heavyweights at conference today in London.
“The BRICs are the new mainstream,” said Ahmed Heikal, Chairman and Founder of Citadel Capital, which has US$ 8.3 billion in investments under control in 14 industries spanning 15 countries. “If you’re really going to be creative, you need to look to what’s next, and that is clearly Africa and the Middle East.”
By 2040, Africa and the Middle East will be home to the world’s largest working-age population, Heikal noted, pointing out that as manufacturing jobs continue shifting out of “rich Asia” toward Africa, particularly the “SANE” countries of South Africa, Algeria, Nigeria and Egypt, which together account for 70% of Africa’s largest countries, one-third of the continent’s population, and more than half of Africa’s FDI, foreign reserves, total exports and total trade.
“Certainly, investing in these geographies is not for the faint-hearted, but the compelling returns make it a core part of any high-growth strategy,” Heikal continued. “If you want to wait until there is no risk, go invest in Switzerland and be thankful for 1.4% on your 10-year government bond.”
A number of sophisticated Western investors and multilateral agencies, the private equity leader noted, “are lining up to invest in Africa and the Arab world. Of the more than US$ 3.5 billion in equity and debt Citadel Capital will have raised by the end of this year, the vast majority has come not from regional SWFs, but from Western institutions and our very established base of sophisticated Arab limited partners.”
Heikal’s remarks came as part of the opening panel of the Financial Times / Emerging Market Private Equity Association (EMPEA) conference “Private Equity in Africa 2010,” held today in London. Tomorrow, Heikal will appear at the EMPEA and Private Equity International (PEI)’s Emerging Markets Private Equity Forum, where he will participate in a discussion about how emerging markets private equity is “steering through the global tide of changes in regulation and public sentiment.”
“There has been a sea change in sentiment toward private equity in Africa and the Middle East,” Heikal noted. “A new generation of younger, dynamic policymakers faces stretched balance sheets and rising public expectations prompted by growing awareness that economic growth should truly ‘lift all boats.’ As a result, we’re seeing a remarkable willingness to turn large-scale power generation, energy distribution, refining and transportation projects over to private investment.”
Heikal’s speeches in London mark the first public appearance in the global financial center in the weeks since the firm announced it has closed a US$ 2.6 billion debt package for its Egyptian Refining Company (ERC). The package will finance the construction of a state-of-the-art US$ 3.7 billion oil refinery in the Greater Cairo Area that will produce over 4 million tons of refined product when completed. The facility’s production will include some 2.25 million tons of EURO V diesel, the cleanest fuel of its type in the world.
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 www.citadelcapital.com.
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