Archive for the 'Egypt' Category
July 15th, 2010 by Tom Minney
Leading African private equity house Citadel Capital (www.citadelcapital.com) has this week announced 2 cement deals. Citadel was recently named “African Business of the Year” at a gala awards ceremony organized by “African Business” magazine. It is based in Cairo and listed on the Egyptian Stock Exchange (ticker CCAP.CA). It has been expanding into Africa and, according to a press release, has US$ 8.3 billion in investments covering 15 industries and spanning 14 countries.
On 15 July Citadel announced that ASEC Engineering and Management, a portfolio company of its investment platform company ASEC Holding, has signed a 3-year renewable contract to provide technical management services to Alsalam Cement Production Company (ACPC) to manage a cement plant near Atbara, Sudan.
The Atbara plant produces clinker, which is then ground with gypsum to make cement. The plant has a production capacity of approximately 2,000 tons of clinker per day. ASEC Engineering will receive a fixed fee for every ton of clinker produced in return for a guaranteed minimum annual production and a pledge to reduce the plant’s consumption of electrical power and fuel. ACPC was established in 2003 and is owned by the Ahmad Osman Abdulsalam Group. The plant near Atbara is currently ACPC’s sole operation, although it is in initial planning stages for the construction of a second plant.
According to a press release ASEC Engineering Chief Executive Officer Mohamed Galal Yakout says: “We look forward to developing a strategy that optimizes the efficiency of Alsalam’s production process.”
ASEC Engineering has long provided market-leading management and consultancy services in Egypt, where in 2009 the company managed 7 plants with a total production capacity of about 15 million tons per annum (MTPA), or more than 30% of total cement production capacity in the country. In 2010, the company has already delivered 3 major cement plant consultancy projects. In addition to its expansion into Sudan, ASEC Engineering played a vital role in the turnaround of the Zahana cement plant in Algeria and is currently exploring opportunities in other regional markets.
In related news, ASEC Engineering will also be responsible for the technical management of ASEC Cement’s nearby Takamol plant, which is in advanced stages of operational testing. Scheduled to open later this month, the plant will have a production capacity of 1.45 MTPA of clinker and 1.6 MTPA of cement, reducing Sudan’s national cement deficit of 3 MTPA by more than half.
Another subsidiary of ASEC Holding, called ASEC for Manufacturing and Industrial Projects (ARESCO), announced on 12 July that it has signed a US$ 130 million contract to construct a new cement plant for the Building Materials Industry Company (BMIC) in the Upper Egyptian governorate of Assiut. ARESCO is a turnkey contractor serving the cement, energy, petrochemicals, petroleum and general industrial sectors. According to the prss release, ARESCO has “state-of-the-art engineering, steel fabrication and construction units that fabricate quality products including boilers, cement mills, preheaters, tanks, condensers and pressure vessels. With over 4,000 employees, ARESCO is a rapidly growing business that has undertaken turnkey projects in Egypt, Iraq, Jordan, Qatar, Sudan, Algeria and Libya.”
ARESCO is to provide all the civil, electrical and mechanical works for the 1.5 MTPA cement plant, which is projected to be complete in 22 months. The company will also carry out all steel fabrication as well as testing and commissioning for BMIC on a turnkey lump sum basis.
Tarek Salah, a Managing Director at Citadel Capital, says in the press release: “The integration of ARESCO’s in-house design and manufacturing capabilities — which include its own workshops and fleet of cranes — have made the company a strong competitor in both the cement and general industrial sectors.”
Citadel Capital is also a lead investor in Rift Valley Railways which holds a 25-year concession to operate the Kenya-Uganda railway.
June 30th, 2010 by Tom Minney
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.”
June 7th, 2010 by Tom Minney
The brand new Nile Stock Exchange (NILEX – http://www.nilex.com.eg/en/px) saw strong trading appetite on 3 June, its first day of trading. NILEX is an initiative of the Egyptian Exchange (EGX – www.egyptse.com) and aims to support growing medium and small enterprises in the Middle East and North Africa region.
The Chairman of EGX, Maged Shawky, said that 4 companies were traded on 3 June for a total trading volume of 1.4 million shares, worth LE 10 million (US$1.8 mln). Shares had launched at par value and prices registered significant increases in the first trading session from this.
The biggest value traded was in El-Barbary Investment Group (BIG), recording LE 7 mln ($1.2 mln), followed by El Bader Plastic, registering a trading value of LE 2.6 mln.
The NILEX trading runs daily from 11am-noon. Brokerage firms operating in the main market can place Bids and Asks. The EGX supervises the trading in NILEX and listed companies must meet the same disclosure rules as companies on the main market. NILEX had taken 4 years of research, planning and preparation and had its first listings approved in mid-2008.
A total of 10 companies are listed on NILEX, covering industry, information technology, retail, mining and the agriculture, chemicals and medical. They are: El Badr Plastic, Masria Card, TN Holdings for Investment, Kato Agriculture Development Co., Utopia Real Estate Investment and Tourism, Ameco Medical Industries, International Company for Fertilizers and Chemicals, Al Oroba Trading Mining and Supplying, AL Moasher for Programming and Information Dissemination and El-Barbary Investment Group (B.I.G). The last two were only allowed to join in the last few days.
Trading will follow an auction system style like the discovery session applied on the main market. Brokers can enter investors’ bid and ask offers any time during the last ten minutes in the session, and the transaction will be completed based on the price that ensures the highest volume traded. If more than one price matches the criteria, some other criteria is taken to choose from among the prices. The price which ensures that the least amount will be left unexecuted is to be chosen. If 2 prices are equated, in this case the average of the two prices is to be chosen. After the end of the session the orders that match the price are executed (from the orders given during the session). This criterion has been chosen due to the small size of these companies, as the auction system provides a better mechanism for trading and pricing these companies.
Dr. Mohamed Mustafa Omran, EGX Vice Chairman, had been appointed chairman of the NILEX Advisory Committee in terms of a decree issued by Dr. Mahmoud Mohieldin, the Minister of Investment.
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/).