Citadel, ne of the leading private equity firms in the Middle East and Africa, announced its financial results for the first quarter of 2012, reporting an 8% year-on-year rise in total investments under control to more than $9.5 billion and a 4.9% rise in assets under management (AUM) to $ 4.4 billion.
The firm’s principal investments in its own transactions rose 12.9% quarter-on-quarter and 16.0% year-on-year to $1.1 billion as it deployed in 1Q12 a total of $ 81.25 million from the first draw-down on a $150 million Citadel Capital-level facility backed by the United States Overseas Investment Corporation (OPIC) to accelerate the growth of select platform and portfolio companies.
Also in the first quarter, the firm made substantial progress toward financial close on the Egyptian Refining Company (ERC), which is building a $3.7 billion green field petroleum refinery in the Greater Cairo Area. The project achieved financial close in the second quarter with total equity investments of $1.1 billion and a $2.6 billion debt package. Participants in the equity component include leading investors from Egypt, the Gulf Cooperation Council (GCC) and international Development Finance Institutions (DFIs).
“The first quarter of 2012 is an inflection point marking the start of the next stage of Citadel Capital’s development,” Citadel Capital Chairman and Founder Ahmed Heikal, said.
“We are now deploying the liquidity added to our balance sheet in FY11 to accelerate development of select platform and portfolio companies as we continue the groundwork for the divestment of minor and non-core holdings. This program — alongside continued cost cutting at the Citadel Capital level — will free management bandwidth and cashflows to focus on core investments.”
With no exits in the quarter, Citadel Capital registered standalone net loss of $5.1 million for 1Q12 on revenues of $4 million compared with net losses of $4.4 million in 1Q11 and $6.3 million in the final quarter of last year. The firm reported a net loss on the back of net interest expenses, inflated by net one-time upfront fees of $9 million related to the refinancing of Citadel Capital’s pre-existing $175 million credit facility and the arrangement of new OPIC-backed debt. The upfront fees related to the OPIC loan represent 100% of the fees pertaining to the loan for the entire useful life of the facility. The terms and tenor of the new facilities are better suited to the planned duration of Citadel Capital’s investments.
“This level of OPEX spending is the ‘new normal’ at Citadel Capital as we target a substantial year-on-year reduction in operating expenditures in 2012,” Heikal added, explaining that the firm has substantially cut expenditures on compensation and consultancy fees while recording no expenditures in the quarter just ended on non-recurring OPEX.
On a consolidated basis, Citadel Capital reports a net loss of $26.4 million on revenues of negative $9.2 million. This represents 55% narrowing of the consolidated net loss quarter-on-quarter. Net losses expanded 43.1% year-on-year, but setting aside the net effect of one-time fees related to Citadel Capital’s refinanced debt and the OPIC-backed facility, the firm would have recorded a 9% narrowing of its consolidated loss in the same period. Quarter-on-quarter, the net loss would have contracted 71%.