Capital increase helps Citadel’s evolution

The Egyptian fund manager’s $520m rights issue will enable it to take majority stakes in most of its core infrastructure and resources holdings.

Citadel Capital, the Egyptian Exchange-listed fund manager, recently closed the second and final subscription period for a rights issue which was fully subscribed and added EGP3.64 billion (€380 million; $520 million) to the firm’s total paid-in capital of EGP8 billion.

Citadel said in a statement that the capital increase would allow it to take majority stakes in most of its subsidiaries in its five core industries of energy, transportation, agrifoods, mining and cement.

The firm has been transitioning from a capital-intensive private equity firm to an infrastructure- and resources-focused investment company and is aiming to divest all non-core subsidiaries over the coming “three or more years”. These include the sale of Sudanese Egyptian Bank, which is expected to close soon.

“Our list of focus industries may be narrower, our risk profile may be substantially lower, but some things have not changed,” said Citadel co-founder and managing director Ahmed Heikal in the statement. “We still aim to be Africa’s leader in infrastructure and resources, and we still prize the creation of shareholder value above all else.”

Hisham El-Khazindar, fellow co-founder and managing director, added: “With majority or 100 percent ownership, a rebalancing of the mix between operational companies and greenfields will allow free cash generated by more established companies to fuel growth-phase investments – and reduce our reliance on external funding.”

Citadel, which has made investments of $9.5 billion in its five core industries, in early April acquired an additional 34 percent of Rift Valley Railways – which runs rail services between Kenya and Uganda – bringing its total shareholding in the business to 85 percent.