January 21st, 2010 by Tom Minney
Egypt-based private equity fund Citadel Capital (www.citadelcapital.com) is to open an East African office in Nairobi during January. Citadel says it is independently ranked as Africa’s largest private equity firm, with US$ 8.3 billion in investments under control in 15 industries spanning 12 countries.
Citadel Capital listed for trading on the Egypt Stock Exchange (EGX) under the ticker CCAP.CA from Sunday 6 December 2009. Citadel Capital’s Chairman and Founder Ahmed Heikal said in a press release was not because management were selling, but in order to make it easier for Citadel to raise capital.
The fund plans to invest a further US$ 200-400 million over the coming two years in Kenya, Uganda and Tanzania, The fund is looking for investments in the region, including in agriculture, transport, mining, energy and financial services, including microfinance.
Mr Heikal says the move comes in the wake of investments in Sudan. To date, Citadel Capital’s investments in Sudan cover transport and logistics, financial services, cement, mining, agriculture, and oil and gas. “By the end of 2010, we will have invested more than US$ 900 million in that nation,” Heikal notes.
Citadel’s track record is of creating value across its investment footprint by transforming national leaders into regional powerhouses through smart deployment of capital and by attracting world-class management teams that have the know-how and experience to efficiently run day-to-day operations. These teams have the ability to help refine and execute the forward-looking strategies necessary to develop new business opportunities.
“Citadel Capital is uniquely positioned to apply the industry development model we honed in North African economies to markets in Kenya, Uganda and Ethiopia,” said Heikal. “East Africa’s appealing natural competitive advantages — including fast-growing consumer markets and large workforces — fit perfectly with our time-proven strategy of turning national players into regional champions.”
The firm’s expansion into East Africa will extend its business model into one of the world’s most fertile and unexplored investment environments.
It has already invested into ASCOM for Geology & Mining, the firm’s platform investment in the regional geological and mining services sector. This has established two joint ventures in Ethiopia and has been engaged in gold and other metal-exploration activities.
The African Development Bank (www.afdb.org) has invested in the Citadel Capital Joint Investment Fund, in support of its regional integration strategy. Attractions for the AfDB reportedly include success in job creation and poverty reduction, as well as the active role that managers take in the investee companies, which brings better governance, skills transfer, standardized processes, more competitiveness and better efficiency.
Citadel Capital fund managers have reportedly returned more than US$ 2.4 billion in cash to their co-investors.
November 19th, 2009 by Tom Minney
The recently formed Egyptian Financial Supervisory Authority (www.efsa.gov.eg) is tightening regulation for listed companies and other financial market intermediaries. It is working with the Egyptian Stock Exchange (www.egyptse.com) to combat insider trading and improve disclosure, including urging better investor relations skills. Good regulation is critical to attracting local and foreign investment.
Penalties in recent months include “hefty fines” on companies and individuals for violations, according to an interview with EFSA Chairman Ziad Bahaa El-Din with newsagency Bloomberg. “Most of those cases get settled by people paying very hefty fines and that’s quite a severe punishment. In the longer term what I would like to do is to improve the structure of the market and of regulation.”
Bloomberg adds that the Egyptian SE suspended trading in 26 stocks last month to understand why shares rose as much as three times without any apparent justification. It says Egypt’s EGX70 Index (small- and medium-sized companies) climbed 59% this year and then fell after the suspensions. The benchmark EGX30 Index has soared 46% in 2009..
The EFSA started operations on 1 July 2009 and replaces the Egyptian Insurance Supervisory Authority, the Capital Market Authority, and the Mortgage Finance Authority. According to its website, it is “responsible for the supervision of non-bank financial markets and instruments, including the Capital Market, the Exchange, all activities related to Insurance Services, Mortgage Finance, Financial Leasing, Factoring and Securitization. The objective is to ensure market stability as well as to regulate the concerned activities, and maximize their competitiveness to attract more local and foreign investments”.
According to Bloomberg, the EFSA suspended Cairo-based Beltone Arabia, part of investment bank Beltone Financial, for 30 days in August for unspecified violations. Beltone Securities had to deposit 10 million Egyptian pounds ($1.8 million) in the EFSA’s Investor Protection Fund for a year. The regulator also suspended Cairo brokerage firm Al-Amal for 30 days in August but did not disclose details. The ESE asked the suspended companies to report future plans and trading later started again in some 17 counters.
Bahaa El-Din was reported as saying the action “seems to have improved the level of disclosure. It’s also sending a message to those that have been concerned from time to time about insider trading and manipulation that the exchange and the regulatory body are taking it seriously.”
He added that some disclosure problems may not be criminal in intent, but occur because of “bad reporting” on behalf of the companies. Companies should give their investor relations officers more training.
Penalties for insider trading include fines and prison. EFSA recently changed the definition of insiders to define more accurately who are insiders, i.e. not just relying on family relationships but pointing to people who may have insider information because of their jobs. Insiders may not trade the stock 15 days before and three days after material news is announced.
September 22nd, 2009 by Tom Minney
Private equity and venture capital opportunities in Africa, billed “the world’s fastest-growing continent”, are on the agenda of the African Venture Capital Association (AVCA) 8th Annual Conference (http://www.avcaegypt2009.com). The top industry meeting will be held in Cairo Marriott Hotel on 15th-17th November, 2009 with the theme “Africa: The Growth Continent for Private Equity. Investment Opportunities 2010 and Beyond”.
AVCA (http://www.avcanet.com) is a non-profit organization founded to develop private equity and venture capital in Africa. Its Chairman, Rotimi Oyekanmi, says the theme highlights “the significant investment opportunities that abound across Africa. Africa, we believe, is the final frontier where you can still achieve above-average returns.”
Topics addressed by world experts include:
- After the Global Financial Crisis – Opportunities for PE and the Economies across Africa
- Comparisons with other Emerging Markets – Does Africa have the Edge?
- Where are the Opportunities: Which sectors will continue to provide significant returns? What new trends are developing? Do single country investments still make sense vs regional and pan-African investments.
- Investing and Accessing Capital in the MENA Region
- The Fortune at the Bottom of the Pyramid: Will Microfinance change the Banking Landscape?
- Is Africa ready for Specialized Funds?
- Finding the Exit: Delivering Returns in Emerging Markets (case studies from across the continent).
Industries such as financial services, agribusiness and infrastructure and power will be looked at in detail, highlighting the investment opportunities and potential for private equity investors.
According to Ahmed Heikal, founder and chairman of conference co-host Citadel Capital (http://www.citadelcapital.com/): “There has never been a more interesting time for confident investors to venture into our continent.. There are good reasons for the IMF to project Africa will grow faster than any other continent in the coming year.” He says recent IMF statistics show Africa growing at 4.1% in 2010, compared to 0.6% for advanced economies and projected a world average of 2.5% growth.
According to Heikal: “From unique transportation and logistics plays to agrifoods and microfinance, Africa is home to outstanding investment opportunities that build wealth for both investors and the communities in which we do business.
Speakers include fund managers and industry leaders. The conference brings Africa together with markets including the Middle East, Europe and the USA and attendees are likely to include international investors, key African government officials and Africa-focused PE funds, Limited Partners and General Partners. Delegates from 19 African countries and 9 non-African countries attended the 2008 AVCA’s conference in Botswana.
The conference is hosted by:
AVCA: A not-for-profit organization founded to promote the development of private equity and venture capital as an alternative asset class in Africa. The Association has 120 full and associate members from 18 African countries and 9 countries worldwide. Its members have some US$ 5 billion of institutional funds under management. AVCA is committed to promoting high ethical standards of business conduct and professional competence in the industry (http://www.avcanet.com).
FMO: The Netherlands Development Finance Company (FMO) is the international development bank of the Netherlands. FMO invests risk capital in companies and financial institutions in developing countries with the mission to create flourishing enterprises which can serve as engines of sustainable growth in their countries. The investment portfolio is €4.2 billion, making FMO one of the largest bilateral private sector development banks worldwide. Thanks in part to its relationship with the Dutch government, FMO is able to take risks which commercial financiers are not yet prepared to take. (http://www.fmo.nl).
Citadel Capital: a leading private equity firm in the Middle East and North Africa, focusing on building regional platform investments in select industries through acquisitions, turnarounds, and greenfields executed via Opportunity Specific Funds. It has 19 OSFs, controlling companies with investments worth more than US$ 8.3 billion in 14 industries, including mining, cement, transportation, food and energy in 12 countries from Algeria to Ethiopia (http://www.citadelcapital.com/).