Citadel Capital Chairman Ahmed Hiekal speaks at the Euromoney Saudi Arabia Conference about the potential of the Kingdom as one of the region's most attractive markets for private equity investments
As the world’s largest oil producer, Saudi Arabia holds an immense amount of potential as it builds a broad-based economy and continues to liberalize and modernize its business climate, a top regional private equity leader told participants at a conference today in Riyadh, Saudi Arabia.
Ahmed Heikal, founder and chairman of Citadel Capital, the leading private equity firm in the Middle East and Africa with US$ 8.3 billion in investments under control in 15 industries spanning 14 countries, noted that, “Our firm has long attracted private equity funds from the Riyadh, but today we are actively studying potential investments in Saudi Arabia.”
Heikal was a key participant at the Fifth Annual Euromoney Saudi Arabia Conference held in Riyadh on 18-19 May 2010. A veteran of the regional financial industry, Heikal took part in an on-stage interview with Euromoney Director Richard Banks on the first morning of the gathering.
The conference brought together prominent figures from government, finance and business who engaged in a fruitful dialogue about the new financial landscape that has begun to take shape in the Kingdom as well as specific market opportunities that have come about as a result of efforts to liberalize and diversify the economy.
“Saudi Arabia has long been on the private equity map as a source of funding, but today it has also become a very attractive investment destination,” said Heikal. “This is an ideal time to explore opportunities as this dynamic economy opens up and foreign ownership restrictions begin to ease. Private equity investors who take a longer investment horizon can thus capture lower valuations today ahead of what we expect will be surging global interest,” said Heikal.
“The tightening of banking credit to the private sector has also raised awareness of the importance of alternative sources of finance and growth capital. This has created new awareness of private equity’s value-add as well as sparking a new market for corporate control as Saudi companies look to divest non-core and non-performing assets,” Heikal noted.
He also pointed out that as the Saudi economy diversifies away from oil, new opportunities will become available for private-sector players beyond the country’s traditional investment driver. Saudi Arabia’s latest budget, with projected spending of SAR 540 billion, is its largest ever, and has a project pipeline worth more than US$ 692 billion widely distributed across construction, petrochemical, oil and gas, infrastructure and power projects.
“Private equity looks for many of the investment themes that are currently developing in the Saudi market: underserved domestic demand, regional competitive advantages and deregulation. Demographic appeal also factors as a significant support to private investment in Saudi Arabia. With a population of more than 25 million growing at an average rate of 2.2% over the past decade, domestic demand and spending are rising rapidly, and consumers are under-leveraged by both regional and global standards,” said Heikal.
Private equity activity in the Middle East and North Africa (MENA) has largely been dominated by Egypt, which attracted 24% of industry investments by value in 2009 (excluding Citadel Capital’s US$ 1 billion investment in Egyptian Refining Company), according to industry data. Saudi Arabia, long the region’s largest economy and the world’s largest oil producer, attracted a 17% share of MENA private equity investments.
Citadel Capital (CCAP.CA on the Egyptian Stock Exchange) is the leading private equity in the Middle East and Africa. Citadel Capital focuses on building regional platforms in select industries through acquisitions, turnarounds, and greenfields executed via Opportunity Specific Funds. Citadel Capital’s 19 OSFs now control Platform Companies with investments worth more than US$ 8.3 billion in 14 countries spanning 15 industries, including mining, cement, transportation, food and energy. Since 2004, the firm has generated more than US$ 2.5 billion in cash returns to its co-investors and shareholders (on investments of US$ 650 million), more than any other private equity firm in the region. Citadel Capital is the largest private equity firm in Africa by PE assets under management (2004-2009, as ranked by Private Equity International). For more information, please visit www.citadelcapital.com.
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