Citadel to hold first close in second quarter

Citadel Capital aims to hold a first close on its debut institutional fund in the second quarter of this year, firm chairman and chief executive Ahmed Heikal said.

“One of the paradoxes of raising money is that it is very difficult to raise money when the time is exactly right,” Heikal told sister news site InfrastructureInvestor.com. “No doubt about it, this is an extremely, extremely difficult time to raise money, which should also tell you something about why it is exactly the right time to be investing.”

The firm is targeting a $500 million final close for the Citadel Capital Joint Investment Fund, which will likely make up to 10 investments in industrial consolidations, distressed and turnaround companies, buyouts and selective greenfield companies, according to online documents from the International Finance Corporation. The IFC's board is due to vote on a proposed $25 million commitment to the fund later this month.

Ahmed Heikal

The fund will continue the Cairo-headquartered firm's geographic focus on Egypt and MENA countries including Algeria and Libya. Raising a traditional private equity fund, however, is departure from Citadel's previous investment strategy.

In the past, Citadel used its own permanent capital of EGY£2.75 billion (€400 million; $500 million) in its platform investments alongside regional co-investors. Deals were financed individually through sector-specific or opportunity-specific funds. The GP's investment in its deal vehicles has typically been between $30 million and $50 million, with most vehicles ranging in equity size from $100 million to $300 million, co-founder Hisham El Khazindar told Private Equity International last year.

Citadel changed tack last year and decided to raise its debut institutional fund in order to increase international institutional participation in its investments and to have capital ready to deploy at all times, Heikal said.

The firm has grown exponentially since being founded five years ago by El Khazindar and Heikal, both former senior executives at regional investment bank EFG-Hermes. It has added an office in Algeria and plans to do the same over the next three years in other core countries in which it invests, including Libya and Syria. It has also mulled the prospect of being the first regional private equity firm to publicly list its management company.

The firm grabbed headlines in June 2007 when it exited Egyptian Fertilizers in a $1.4 billion sale to an Abraaj Capital-led group. At the time, it was the MENA region's largest ever private equity deal and included a record $1.25 billion of leverage.