PE firm Citadel Capital wins “African Business” title

Private equity firm Citadel Capital has won the title of “African Business of the Year” at a gala awards ceremony organized by “African Business” magazine (www.africasia.com/africanbusiness) in London on 21 June. Other finalists included South Africa’s De Beers, Kenya’s Safaricom, pan-African bank Ecobank and Kenya’s Bidco Oil Refineries.
Citadel (www.citadelcapital.com) is based in Cairo and listed on the Egyptian Stock Exchange (ticker CCAP.CA). It has been expanding into Africa.
According to a press release, the company has US$ 8.3 billion in investments covering 15 industries and spanning 14 countries through (see Strategy below). It is independently ranked by Private Equity International (www.peimedia.com) as the continent’s largest private equity firm in terms of assets under management (2005-2010). Since its founding in 2004, Citadel has generated US$ 2.5 billion in cash returns for shareholders and co-investors on investments of US$ 650 million.
Citadel Capital Chairman and Founder Dr. Ahmed Heikal says: “It is truly an honour to have been chosen as African Business of the Year from such a distinguished group of nominees. Founded little more than 5 years ago with an initial investment of just US$400,000, we are very proud of the growth that we have achieved. Citadel Capital continues to pursue investment opportunities throughout the continent that will allow us to transform promising national companies into regional champions.”
The 2010 African Business Awards were organized by IC Publications (publishers of Africa Business) and the Commonwealth Business Council. They provide a platform to celebrate excellence and best practices in African business, recognizing those who have driven Africa’s rapidly transforming economy. This year’s awards ceremony included more than 500 attendees including African ministers, senior government and business officials and diplomats.
The African Business of the Year award is given annually to a company that has demonstrated outstanding financial performance and significant development of new market segments, together with “innovative working techniques and employment of staff from the communities in which it operates.” Winners must have high standards of good corporate citizenship and have contributed significantly to changing the perceptions of Africa in global markets.
“Citadel Capital seeks out national companies with the potential to become regional champions, then deploys the human and monetary capital needed to make that transformation happen,” said Citadel Capital Managing Director and Co-Founder Hisham El-Khazindar. “Over the past 12 months, the firm has closed a significant number of transactions in what we believe will be an excellent vintage year for private equity investing.”
In reaching its decision, the awards committee took note of several recent developments by Citadel, including
• acquiring a controlling stake in Rift Valley Railways of Kenya and Uganda,
• building an environmentally friendly river transportation network stretching from the Mediterranean port of Alexandria to southern Sudan,
• the construction of Sudan’s most technologically advanced and environmentally friendly cement plant,
• the acquisition of the nuclei of a solid waste management platform, and
• substantial fundraising progress on its MENA and Africa Joint Investment Funds.
Omar Ben Yedder, Associate Group Publisher of African Business magazine, the organiser of the event, said: “The Awards are even more significant this year, as it takes place during the World Cup season, and thus resonates with the new optimism of Africa as a continent capable of realising the opportunities that abound there.”
The African Business of the Year award follows Citadel Capital’s earlier 2010 achievements, including Infrastructure Investor magazine’s African Infrastructure Deal of the Year and recognition by emeaFinance as Africa’s Best Private Equity House.
Strategy (from the company website) :
“Citadel Capital’s strategy is to acquire or create national companies that can serve as platforms for regional expansion in specific industries. For each deal, the firm raises an Opportunity-Specific Fund (OSF) to control a single platform investment. To date, Citadel Capital has raised 18 OSFs that control Platform Companies in 15 industries with investments worth more than US$ 8.3 billion. The firm has long pursued an incremental approach to investment that is serving it well during the current economic climate.
Citadel Capital is a control investor and is majority owned by its senior management and staff. It is also a principal investor in its own transactions, with equity of more than US$ 735 million committed to its own deals. While the firm is primarily focused on opportunities in the Middle East and Africa, it has a strong interest in proximal African nations. Going forward, Citadel Capital plans to open offices in South Sudan and Ethiopia to support its growing investment presence in those regions.
The firm focuses on opportunities supported by two primary themes:
Natural Advantages: Opportunities that arise from the Middle East and Africa region’s numerous advantages, including lower labor, raw material and energy costs, as well as its favorable geographic location and climate.
Inefficiencies: Markets that have suffered from a lack of private investment, where the existing participants lack the necessary scale and sophistication to compete effectively, or where state control and subsidies have left a legacy of inefficiencies.
Among the industries on which the firm currently focuses are cement, mining, energy, food transportation and logistics and metallurgy.
Depending on the investment cycle, Citadel Capital is flexible in regards to the entry point it uses to pursue deals and is open to consolidation plays / industry roll-ups, leveraged buyouts, distressed deals and even greenfield investments.”

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