Citadel Capital, an Egyptian private equity firm with stakes in more than 20 companies, has sunk like a stone since going public in December. But the weight could soon be lifted. If Citadel, which controls US$8.3 billion, can engineer exits on several of its investments it would serve as a trigger for the stock to reach its potential and the company could take on new investments.
Hatem Alaa, an analyst at HC Brokerage, said near-term exits are likely from three of Citadel's businesses. Mr Alaa rates the firm as a "buy" with a price target of 13.14 Egyptian pounds a share, almost double the price at which it was trading yesterday when it closed at 6.74 pounds. He said Citadel shares had been unfairly judged by investors since it went public and increasing interest from institutional investors would help unlock the real value.
Citadel could sell Taqa Arabia, one of its older investments, which has enlisted EFG-Hermes as consultant for a possible public offering. It could also sell a stake in ASEC Holding, of which it owns 49.8 per cent. Citadel's only listed company, ASEC Mining, would help to serve as a liquidity cushion in the meantime. This week Citadel secured a $4.9bn loan from Bank of Khartoum for an agricultural project in Sudan.
The funds will go toward helping Sabena Solutions, a company in which Citadel has a 21 per cent stake, complete a project to plant 840 hectares of Sudanese land with sorghum. Egyptian Refining Company (ERC), in which Citadel owns 8.2 per cent, is the company's largest commitment and has sound fundamentals and significant long-term potential. Mr Alaa said ERC would be a prime driver of what he expected would be earnings of more than 40 per cent on its assets under management.