Assets show improvement for Citadel Capital

Citadel Capital, the Egptian buyout giant, attracted about $100 million of new investments in the third quarter as its losses narrowed.

Assets under management for Citadel Capital, one of the Middle East's largest buyout firms, rose to US$4.2 billion (Dh15.42bn) in the third quarter as its fortunes improved after months of distress.

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Citadel, based in Cairo and listed on the Egyptian Exchange, added $101.6 million in assets under management in the third quarter, the company said yesterday. But despite attracting new investments, it posted a $3.5m loss for the quarter. It lost $5m in the same period last year.

"Citadel Capital is on track to close this tumultuous year on very solid footing," said Ahmed Heikal, the firm's chairman and founder, citing cost-cutting and fund-raising as pivotal.

"While we enter 2012 on a cautious footing, we do so mindful that our portfolio is firmly on the right side of macroeconomic trends," he said.

Buyout firms such as Citadel, which pool investors' money to acquire stakes in private companies in the hopes of selling them later at a profit, have had a rough year. They have been hit hard by both the political unrest in the Arab world and the debt crisis sweeping Europe.

Deal-making has slowed to a virtual trickle this year, demonstrating the chilling effect of political and economic uncertainty on investor sentiment. According to a report from Bureau van Dijk, a Dutch research company, only $35m of mergers and acquisitions were announced in the region last month, the weakest monthly showing in 12 months. Citadel did not sell any assets in the third quarter.

In recent weeks, however, there have been a few rare glimmers of activity. Abraaj Capital of Dubai, the Middle East's largest private-equity player, said this week that it sold its 50 per cent stake in a Turkish medical group to Malaysian investors. The Carlyle Group, one of the world's largest private-equity companies, announced this month that it was buying part of a Saudi food company. And Coca-Cola announced an investment worth almost $1bn in a Saudi drinks company.

Against that backdrop, Citadel is looking forward to next year, however apprehensively.

"There will be significant opportunities to add value to our portfolio in a year that we expect will be transformative for many of the economies in which we invest," Mr Heikal said.

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