Citadel seeks investors nod for $523 capital hike
Cairo, September 15, 2013
Citadel Capital, a leading investment company in the region, said it has got regulatory clearance from the Egyptian Financial Supervisory Authority (EFSA) to seek shareholders' approval for a 3.64 billion Egyptian pound ($523.4 million) capital hike.
The proposed share issuance would be at par value (EGP 5) and would see the firm’s paid-in capital rise to EGP8 billion from EGP4.36 billion.
Citadel Capital’s proposed share issuance is part of the firm’s transformation from the largest private equity firm in Africa into the leading investment company in the region.
With this capital increase, Citadel plans to acquire majority control of most of its platform companies, particularly in its 5 core focus industries, said a senior official.
"The proposed capital increase will be used by Citadel Capital to reach 51-100 per cent ownership in most of its platform companies, in particular the firm’s subsidiaries in its five core industries: energy, transportation, agrifoods, mining and cement," said its chairman and founder Ahmed Heikal.
The firm, he stated, plans to exit non-core investments over the coming few years as it transforms its business model to become an investment company, he noted.
“Economic fallout from the Arab Spring has generally depressed asset values and put liquidity at a premium, making this an opportune moment to increase our holding in core investments,” remarked Heikal.
“At the same time, that fallout has also accelerated and brought into sharp relief a number of macro trends that are very favorable to our core investments,” he added.
According to him, Citadel Capital will maintain a focus on five core industries with its present emphasis on large-scale investments across Egypt, East Africa and North Africa, the heart of its current investment footprint.
“Capturing the upside presented by these macro trends is demanding transformation in our DNA that will allow a more concentrated focus on a limited number of investments,” observed Heikal.
“We believe we will be creating outstanding value for our shareholders by holding investments in our five core industries for the long-term. We are increasing our investment in proven management teams and in businesses that are clearly on the right side of these macro trends — all at very attractive valuations,” he added.
The long-term holding periods permitted by the new model will allow Citadel Capital to maximize value creation through a balanced portfolio that includes a healthy mix of both assets that provide stable dividend streams and that are cash generative, and others that are in high-growth phases.
Commenting on the move, co-founder and managing director Hisham said the investment company model will allow management to maintain a sharp focus on the companies it knows best while simultaneously making Citadel Capital easier for analysts and investors to value.
“The new model would further provide Citadel Capital with an expanded balance sheet, allowing for improved financing options,” he added.
With the capital hike, the firm’s total number of shares will rise to 1.6 billion, of which 1.2 billion would be common shares and a further 400 million preferred, said Heikal.
The proposed capital increase will be a key step in a process that will see co-investors and limited partners in the firm’s platform companies given the opportunity to become shareholders in Citadel Capital, he added.-TradeArabia News Service