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Citadel wraps up $3.7bn Egyptian Refining deal

A consortium led by Egyptian private equity firm Citadel Capital has achieved financial close on a $3.7bn deal to construct a greenfield refining upgrade public-private partnership project in the Greater Cairo area.

Citadel Capital platform company Egyptian Refining Company (ERC) has achieved financial close on a $3.7 billion package for the construction of a greenfield petroleum refining upgrade project in the Greater Cairo area. The deal is a public-private partnership.

The new state-of-the-art facility will produce over 4.1 million tons of refined products and high-quality oil derivatives per year, including more than 2.3 million tons of Euro V diesel, which is the cleanest-burning diesel fuel in the world. It is estimated that the new plant will allow Egypt to reduce its current level of diesel imports by 50 percent.

The deal, which is one of Africa’s largest-ever project finance transactions, includes a $2.6 billion debt package provided by Japanese and Korean export credit agencies together with the European Investment Bank and African Development Bank.

A total of $1.1 billion of equity has been invested alongside Citadel Capital from the IFC (which takes a 6.4 percent stake), DEG (2.0 percent) and FMO (2.2 percent) development finance institutions as well as infrastructure fund manager InfraMed (7.5 percent), Qatar Petroleum International (27.9 percent) and Egyptian General Petroleum Corporation (23.8 percent). Citadel, which has directly and indirectly invested more than $155 million, has an effective stake of 11.7 percent.

EFG Hermes Investment Banking acted as placement manager for the equity component, raising $462 million of the required funding. The debt package was arranged by Societe Generale with legal advice from Shearman & Sterling and Arab Legal Consultants.  

The deal comes in the wake of continuing political turmoil in Egypt following the popular uprising that began in January 2011 and saw the overthrow of the Mubarak regime. Continuing protests have arisen from a court decision to rule Egypt’s parliament illegitimate and keep an ex Prime Minister in the presidential race.

“The financial close of ERC confirms to international investors and the global community that Egypt is open for business,” said Citadel founder and chairman Ahmed Heikal in a statement. “The signal this sends is huge. ERC is a key component of Egypt’s energy security going forward.”