Proceeds from the sale will be used to deleverage at the holding level as Qalaa Holding looks to reduce financial risk and push through growth initiatives at portfolio companies
3 July 2018 — Qalaa Holdings (CCAP.CA on the Egyptian Exchange), an African leader in energy and infrastructure, and Compass Investment (Compass), a leading value investment firm, jointly announced the completion of the sale of 100% of Bonyan for Development and Trade (Bonyan), from Qalaa Holdings subsidiary MENA Home Furnishings to Compass.
Bonyan, a specialty real estate developer operating in Egypt, is the owner of the award-winning Designopolis mall. Originally developed as a specialty furniture mall, Designopolis is an open-air asset designed by renowned architectural firm Skidmore, Owings and Merrill built on a 117,000 square meter plot of land located in West Cairo in the Sheikh Zayed area. Compass will repurpose the approximately 1 km long promenade of some 300 shops into a complete lifestyle destination that includes shopping, dining, office space and entertainment activities for the entire family.
Commenting on the transaction, Qalaa Holdings Co-Founder and Managing Director Hisham El-Khazindar said: “The sale of Bonyan falls under our strategy of divesting non-core businesses, allowing us to focus more resources and management bandwidth on Qalaa Holdings’ energy and infrastructure platforms. Proceeds from the transaction will be allocated to deleveraging at the holding and subsidiary levels as our company gears up for commercial start at the Egyptian Refining Company (ERC) and pushes forward growth initiatives at portfolio companies including TAQA Arabia, Egypt’s largest private sector energy distribution business, Tawazon, a regional pioneer in the solid waste management industry, and Nile Logistics.”
“Compass has a proven history of unlocking value in unique assets, and we view Egypt’s current economic trajectory as an opportune moment to increase our exposure to the nation’s fast-growing commercial real estate market,” said Compass Founder and Chairman Shamel Aboul Fadl. “The asset we are acquiring is an award-winning development offering significant growth and revenue-generating opportunities given its location in the heart of Sheikh Zayed. The city’s increasingly affluent and growing community, coupled with the rising demand for outdoor activities and quality entertainment facilities, make it a unique investment opportunity.”
Net equity proceeds payable to Qalaa Holdings for the sale amounted to EGP 162 million. The losses incurred as a result of the MENA Home Furnishings exit have been reflected in Qalaa Holdings’ 2017 end of year results. Furthermore, the deal included the settlement of bank debts, whereby Compass settled bank liabilities and assumed liabilities to third parties amounting to c. EGP 340 million and acquired the principle of the MENA Home Furnishings shareholder loan to Bonyan, amounting to c. EGP 272 million, for an undisclosed amount.
Compass typically targets industries that are stable and have potential to generate attractive risk-adjusted returns. The company seeks to create value primarily through the improvement of business operations and the strategic expansion of the companies that it invests in by bringing on board talented management and leveraging their passion and expertise to drive growth.
Qalaa Holdings held an effective (indirect) 60% ownership stake in Bonyan. The sale of Bonyan falls within its strategy of divesting non-essential assets and significantly reducing financial risk by deleveraging at the holding and platform company levels. In the past four years, Qalaa Holdings has made significant strides in streamlining and reshaping its investments with the conclusion of exits that include El Aguizy, Enjoy, Tanmeyah Microenterprises, Misr Glass Manufacturing, the United Glass Company, Rashidi El-Mizan, ASEC Minya Cement, Djelfa Cement, Dice Sports & Casual Wear and ACST (Dina Farms’ retail supermarket chain).
Compass Capital acted as buy-side advisor while TMS Law Firm served as legal counsel for the buyer.
Notes for Editors
Qalaa Holdings (CCAP.CA on the Egyptian Stock Exchange) is an African leader in energy and infrastructure. Formerly known as Citadel Capital, Qalaa Holdings controls subsidiaries in industries including Energy, Cement, Agrifoods, Transportation & Logistics, and Mining. To learn more, please visit qalaaholdings.com.
Compass Investment (Compass) is a leading value investment firm based in the DIFC. The firm’s multi‐disciplinary team has a long and successful track record of generating attractive investment returns in its portfolio companies by following a disciplined investment approach, employing talented management, and driving lasting value growth for all stakeholders. Compass’ private equity and operations expertise spans multiple industries and has allowed the firm to successfully execute numerous transactions requiring capital flexibility, financial restructuring, and operational turnaround.
References to Compass may include the activities of Compass Investment (principle investment), and Compass Capital for Financial Investments (financial advisory),
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