Cairo-headquartered Citadel Capital, which is publically traded on the Egyptian stock exchange, has been the subject of intense speculation since it revealed in June that it was in “early stage, verbal talks” with “more than one potential strategic investor regarding the possible sale of shares in Citadel Capital”.
In a further statement made on Tuesday, the group revealed it had formally mandated Citigroup as financial adviser, “to look into all the strategic alternatives available to the firm and to provide guidance on any possible acquisition offers”.
Dubai-based buyout firm Abraaj Capital has been repeatedly linked with a deal to acquire a stake in its MENA-region peer, with Citadel eventually confirming the two had held talks.
However, a stake sale to Abraaj is just one of many options on the table, according to a source close to the firm.
“There is a menu of options on the table. Partners within Citadel Capital who control about 32 percent of the company in economic terms have held preliminary talks with Abraaj about a deal, but that is just one of many options,” the source said.
Citadel has also explored the possibility of a $175 million rights issue, for example. In May, it revealed in a statement that the Egyptian Financial Supervisory Authority (EFSA) had denied its request to call a board meeting to authorise a capital increase, but is appealing the decision.
Listed private equity groups typically trade at a discount to their net asset value, and many have come under pressure from shareholders to narrow those discounts. As a result, firms including Citadel have begun looking at ways to ensure their share price more adequately reflects the value of their assets.
Stephen Murphy, a managing director at Citadel Capital with responsibility for institutional fundraising, said: “We trade at a significant discount to portfolio net asset value (PNAV), which is obviously a concern, particularly when you consider that PNAV does not reflect any value for the asset management business, and we are the largest quoted emerging markets PE manager, with over $4 billion of committed equity capital under management.”