Citadel Capital slips as talks with Abraaj fail

What's down: Citadel Capital declines as talks with Dubai-based Abraaj Capital to buy a stake in the private equity firm end.

Citadel Capital dropped to its lowest in nearly two months after talks for Dubai's Abraaj Capital to buy a stake in the Egyptian private-equity company ended without agreement.

Abraaj "is no longer currently exploring a transaction with Citadel Capital", the company said in a statement. "This does not preclude Abraaj Capital from exploring such a transaction in the future should performance, deal terms and or circumstances change."

Citadel shares fell 2.1 per cent to 4.96 Egyptian pounds on the Egyptian Exchange yesterday, the lowest price since May 26.

"The stock's reaction … is related to the news on the cancellation of the deal," said Hatem Alaa, an analyst at HC Securities in Dubai.

Citadel has investments totalling US$4 billion across the Middle East and Africa in sectors such as infrastructure and building materials, transport and logistics, agriculture and consumer goods, petroleum refining, and upstream oil and gas operations.

Eighty-four per cent of the private-equity company's investments are in Egypt.

Its investments there were less productive amid the unrest that culminated in a revolution in the country this year.

On July 17, Citadel reported a first-quarter loss of 114.2 million poundsversus a loss of 33.7m pounds in the same period last year.

"This post-revolutionary period has not been easy," Ahmed Heikal, Citadel's chairman and founder, said this month. "Citadel Capital is still in a cash-preservation posture, our previously planned IPOs remain postponed, and we continue to expect lower-than-usual fund-raising momentum for the balance of the year."

All exits from investments are likely to be delayed by 12 to 18 months, given the continuing unrest in parts of the region, Mr Alaa said.

Citadel approved a rights issue of up to $175m last week to boost its balance sheet.

Subscribers under the share issue must hold their the stock for at least a year. The rights issue would be in effect two months from the date of its approval.