Has Debt Had Its Day?

The co-founder of the Middle East and Africa's leading private equity firm, in a keynote address to SuperReturn Emerging Markets opening today in Geneva, calls on industry leaders to place financial engineering in context and turn to a broader mix of value-creation tools

A sensible approach to financial engineering is just one of many tools private equity firms can use to create outstanding value at the companies in which they invest, the co-founder of the leading private equity firm in the Middle East and Africa told industry leaders today at SuperReturn Emerging Markets in Geneva, Switzerland.

“It is not that debt has had its day, but that debt is only one tool whose use may vary between markets,” said Hisham El-Khazindar, Co-Founder and Managing Director of Citadel Capital, which has US$ 8.3 billion in investments under control in 15 industries spanning 14 countries.

“The dynamic is simply different in developed countries than it is in emerging markets, “ El-Khazindar continued. “We see less leverage today than we did pre-crisis, but leverage is bound to return even in developed nations. The simple fact, though, is that leverage is of comparatively limited relevance to those of us who invest in emerging markets. Citadel Capital, like many emerging markets investors, emphasizes more project and growth finance than it does acquisition finance simply because the opportunities in our core geography are more about building businesses than they are about financial engineering. As patient builders of businesses, our view is that we are creating the next generation of great companies for which others will pay us a premium.”

El-Khazindar is one of four senior executives from Citadel Capital who will take to the stage 28-30 June 2010.

In his opening-day address, El-Khazindar noted that, “At Citadel Capital, our strategy is to identify national companies with unique competitive advantages that can be grown into regional platforms through the judicious deployment of management talent, proven best practices and systems, and appropriate levels of capital, be it equity or debt.”

Also participating at the Geneva event is Citadel Capital Managing Director Abdalla ElEbiary, who will chair the conference’s Middle East stream, where panelists will address topics including whether the Middle East is merely a source of investment capital or an investment destination in its own right.

Shereef El-Prince, also MD at Citadel Capital, will moderate a discussion on how the private equity model for emerging markets differs from that in developed markets, while Citadel Capital MD Alaa El Afifi will chair a panel discussion on political risks, exit strategies and competition from Chinese investors in Sub-Saharan Africa, where Citadel Capital’s latest investment was the acquisition of a stake in Rift Valley Railways (RVR) of Kenya and Uganda. Citadel Capital has already agreed a US$ 250 million restructuring plan for RVR.

The firm’s participation at SuperReturn Emerging Markets comes just one week after it was named African Business magazine’s “African Business of the Year,” topping established competitors including De Beers.

—Ends—

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.

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