Investors will both do well and maximize their chances of locking in attractive long-term returns by investing in businesses that provide solutions to some of the greatest challenges of our age, said the chairman of Africa’s largest private equity firm
The myriad global challenges now faced by business and policymakers alike are daunting, but a look beyond the headlines shows there are unique opportunities to lay the foundation for sustainable global growth by building real businesses that address the needs of a massive, fast-growing emerging markets population, the founder of Africa’s largest private equity firm said in Davos, Switzerland.
“We gather here tonight from the four corners of the world under clouds. Not one single cloud, but many,” Ahmed Heikal, Chairman and Founder of Citadel Capital, the leading private equity firm in the Middle East and Africa with $9 billion in investments under control, said.
“In some cases, these are clouds particular to our unique circumstances,” he said.
“In my neighbourhood, we have the still-unfolding revolutions and, in some cases, political strife and conflict. Globally, even those who enjoy relative calm face falling consumer and business confidence, a slowdown in global economic activity, high and rising commodity prices, and challenging public finances.
“But uprisings, natural disasters, nuclear meltdowns and debt defaults do not need to be the hallmarks of our age. We have a unique opportunity to chart a brighter economic future by focusing not on traditional opportunities, but on opportunities to generate returns while solving problems,” he said in opening remarks at the World Economic Forum’s Investor Reception before serving as a discussion leader for an interactive workshop titled ‘The Investment Heatmap 2012.’
With emerging and frontier-market governments facing both rising public expectations and constrained balance sheets at the same time as developed markets slow down, business brings to the table the ability to articulate and implement solutions to some of the pressing challenges of our age.
“Despite investor flight immediately after the Egyptian Revolution, Citadel Capital raised equity and debt of well over $300 million in 2011 for our 19-platform portfolio while adding a further $325 million in fresh cash to our balance sheet. We did this because we have built viable businesses that create value for our investors by offering solutions to pressing national challenges. Our investments offer solutions to solid waste problems; they will eliminate Egypt’s reliance on diesel imports while simultaneously preventing the release of nearly 180,000 tons of sulphur dioxide each year; they ease road congestion and reduce emissions by shifting transport off our highways and onto un-used water ways,” Heikal said.
“This emphasis on solutions is not solely in Egypt, of course: It extends across our 15-country footprint, from re-building the national railway of Kenya and Uganda to growing critical crops for local sale in Sudan and South Sudan,” he added.
“With 2012 giving every sign of looking a lot like 2011,” he concluded, “the challenge for us today is not to complain about gathering clouds, but to start investing in enterprises that solve these problems.”