The founder of the leading private equity firm in the Middle East and Africa tells a top industry gathering that Arab sovereign wealth funds need to devote more attention to opportunities in the Middle East and Africa rather than chasing low returns in developed economies
“We are once again seeing SWF funds flowing into Western assets and comparatively low sums moving into the very compelling opportunities here in the Middle East and Africa,” Heikal said. “By comparison, sophisticated Western investors and multilateral agencies are lining up to invest in Africa and the Arab world. Of the more than US$ 3 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.
“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. 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.”
Heikal’s remarks came as part of his keynote speech on “11 Lessons Learned on the Frontier,” which dissected the simple truths of private equity investing the Middle East and Africa.
Heikal led a team of three other executives from Citadel Capital (CCAP.CA on the Egyptian Stock Exchange) who are in Abu Dhabi to participate in the SuperReturn Middle East 2010 conference from 17-20 October 2010. With US$ 8.3 billion in investments under control, Citadel Capital is the leading private equity firm in the Middle East and Africa.
“As an investment approach building, controlling, rapidly growing and then selling companies — private equity is an investment structure tremendously well-suited to emerging and frontier markets.” Citadel Capital Co-Founder Hisham El-Khazindar told a conference panel with the theme Back to Basics, “Its long-term horizon and flexibility allow private equity investors to capitalize on opportunities that other corporate or investment structures are ill-suited to approach”
Their speeches in Abu Dhabi mark the first public appearance in the Emirates for Heikal and El-Khazindar 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.
Leading global development finance institutions and export credit agencies from Europe and Asia were among the backers of the debt package.
Citadel Capital Managing Directors Abdallah ElEbiary and Stephen Murphy also addressed audiences at SuperReturn. ElEbiary addressed the potential of government and European cooperation in North Africa, while Murphy joined the conversation on how general partners plan to put uninvested capital to work in the period ahead.
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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