Hisham El-Khazindar, Co-Founder and Managing Director of Citadel Capital, took part in a panel on emerging market opportunities and trends at the IFC-EMPEA annual gathering in Washington D.C, outlining the strong upside potential for sustainable, high-growth investments in Africa and the Middle East.
Citadel Capital (CCAP.CA on the EGX), the leading investment company in Africa and the Middle East with $9.5 billion in investments under control, took part in the 15th annual IFC Global Private Equity Conference held in association with EMPEA in Washington, D.C. on 14-16 May.
Citadel Capital Co-Founder and Managing Director, Hisham El-Khazindar participated in a panel discussion titled “A Macro Perspective: Emerging Markets Opportunities and Trends,” which featured global industry leaders with significant emerging market expertise and insights into the challenges and constraints of emerging market private equity.
“In many instances a crisis situation can create opportunity,” said El-Khazindar. “Across Egypt, East Africa and North Africa, we see excellent investment opportunities in sometimes challenging countries that are in need of management expertise and capital.”
In the midst of challenging economic and political conditions in Egypt, Citadel Capital’s platform company, Mashreq, singed a 25-year concession agreement to build a unique EGP 3 billion tank farm on the Suez Canal that will serve the global shipping market and be a backup Egypt’s national energy security policy.
“In Egypt, the Arab Spring and has brought about a new set of political and economic challenges that have presented some key investment opportunities. For example, the energy sector in Egypt is in dire need of new investment to upgrade existing power plants and power transmission networks as well as investments in new power generation and refining capacity to meet increased local demand for electricity and petroleum products,” El-Khazindar, said.
“Given Egypt’s constrained financial and organizational resources, much of this infrastructure development should be driven by the local and international private sector, in the form of public private partnerships,” he added.
Citadel Capital’s Egyptian Refining Company (ERC), a $3.7 billion Greenfield petroleum refining upgrade project in the Greater Cairo Area will reduce Egypt’s present-day diesel imports by more than half, eliminate approximately 93,000 tons of sulfur emissions annually, and produce over 4.2 million tons of refined products and high-quality oil derivatives per year including 3 million tons of jet fuel and Euro V diesel (the cleanest-burning diesel fuel in the world).
“In East Africa a growing consumer base, natural resource discoveries and improved governance are driving growth and creating unique opportunities in several sectors.
“We see opportunity to create value in sectors such as infrastructure that will serve as a catalyst for Africa’s growth. The insufficient amount and quality of infrastructure is currently a major impediment to developing trade, creating jobs and improving competitiveness on the continent,” El-Khazindar, said.
“As urbanization increases, consumer markets grow and more countries on the continent develop broader ties to the global economy, the need for infrastructure investments, particularly those related to energy and transportation, will multiply,” El-Khazindar, added.
Egypt has been Citadel Capital’s center of gravity since inception. In 2006 the firm began investing directly in sub-Saharan Africa and has historically striven to broaden investor interest in African opportunities particularly those that move away from pure commodities and towards infrastructure, manufacturing and value-added exports.
Among the firm’s notable African investments is Rift Valley Railways (RVR), which holds a concession to operate the national railways of Kenya and Uganda, linking the Indian Ocean port of Mombasa to the interiors of Kenya and Uganda, including the Ugandan capital of Kampala. For the past two years, Citadel Capital has been working with the RVR management and its local partners to implement a three-point turnaround program with investments of $287 million. RVR is helping open doors to intra-African trade by bringing transport costs down by as much as 35%, a savings that should have a substantial impact on businesses and consumers alike.
“Investments like RVR that can be a part of Africa’s growth story are not businesses that lend themselves to short holding periods. As an investment company we are now focusing on taking a much longer 10-15 year view on opportunities versus the traditional 3-5 year private equity industry view,” El-Khazindar, said.
“The bottom line: long term confidence in these markets has to translate into long-term investment strategies.”