Egypt’s Qalaa moves to shed debt as it rebalances asset sheet

In all, the transactions will reduce Qalaa’s debt load by 800 million Egyptian pounds. The transactions are expected to be completed by the end of the year.

The Egyptian investment firm Qalaa Holdings says it struck a deal to raise its investments in sectors including cement making and transport.

The Cairo-based company is pinning its growth strategy on such areas.

At the same time, Qalaa said it would sell other assets deemed less critical to Financial Holdings International, one of its biggest co-investors.

In all, the transactions will reduce Qalaa’s debt load by 800 million Egyptian pounds (Dh385.1m). The transactions are expected to be completed by the end of the year.

“Deleveraging is a key strategic goal for the company in 2015 and onwards,” the firm said.

As part of the agreement, Qalaa will buy FHI’s stakes in Asec Holding, a cement company; Taqa Arabia and Mashreq, the energy companies; Nile Logistics, a transport company; Dina Farm Supermarkets, a retailer; and the metallurgy company United Foundries. Those acquisitions will raise Qalaa ownership in those companies to between 80.4 and 100 per cent.

Qalaa will sell Mena Homes, which runs the Designopolis furnishings mall near Cairo; Grandview, an investment company; and Dina Land Farm Companies.

The investment firm, which has about US$9.5 billion of assets under management, said in February that it had hired the Egyptian investment bank EFG-Hermes to advise on the sale of Rashidi El Mizan, a tahini products maker, and Dina Farms, the largest private dairy farm in Egypt.

That came amid a pick-up in merger and acquisition activity in the food business. The US cereal maker Kellogg in January bought a majority stake in the Egyptian biscuit maker Bisco Misr after a bidding war with the Dubai-based private equity firm Abraaj Capital.

Qalaa, formerly Citadel Capital, has incurred four years of annual net losses since 2010, after the 2008 financial crash and the Egyptian protests in 2011 that left the country’s economy in tatters.

Shares of Qalaa have dropped 29 per cent this year and are hovering around all-time lows.

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