Lessons Learned From Investing US$9 Billion in Africa

Hisham El-Khazindar, Co-Founder and Managing Director of Citadel Capital, Africa's leading private investment firm, tells industry gathering in London that Africa's compelling demographics hold opportunities for private equity investors who can mitigate risk and mobilize local and international talent

“The nature of African Private Equity is different compared with traditional Western market forms. Broadly speaking: it is more entrepreneurial, more about building new businesses through greenfields, rollups and brownfields and much less about LBOs,” said Hisham El-Khazindar, Co-Founder and Managing Director of Citadel Capital, the leading private equity firm in Africa and the Middle East with U$ 9 billion in investments under control in 15 countries spanning 15 industries.

A decade ago, only one African nation held opportunities for private investors, according to a recent study by the International Finance Corporation. Today, the IFC believes that the continent of more than 1 billion consumers will have the world’s largest and fastest growing working age population by 2040.

“We share their belief,” said El-Khazindar. “Home to some of the world’s fastest-growing economies including Ethiopia and Tanzania, Africa holds at least 21 countries with opportunities for private equity investors seeking superior returns.”

In his keynote address at the Private Equity World Africa conference in London on 21 March, El-Khazindar outlined the methodology and investment themes that allowed Citadel Capital to become the largest private equity investor in East Africa in 2011 with US$ 234 million in financing for Rift Valley Railways (RVR), the national railway of Kenya and Uganda.

El-Khazindar noted that, “The firm’s successful financing package for RVR which included the participation of leading development finance institutions (DFIs), has proven that sophisticated institutions are willing to consider African opportunities if the financing, political and execution risk can be adjusted on an opportunity-by-opportunity basis.”

“A credible local partner with on-the-ground expertise and a compelling investment strategy is key for international LPs looking for the most investable opportunities in Africa,” he added.

Prior to Citadel Capital’s investment in early 2010, RVR was a loss-making operation with aging and poorly maintained infrastructure and rolling stock. Citadel Capital has worked closely with RVR’s management and local partners to formulate a three-point, five-year turnaround program backed by a US$ 300 million capital expenditure budget.

“With additional funding from Citadel Capital to implement select aspects of this turnaround program, RVR achieved important operational and financial milestones, including a declining accident rate, improved turnaround times, better freight volumes, and its first positive monthly EBITDA in its history as a private company,” said El-Khazindar.

Also participating in a panel discussion on how private equity in Africa compares to other emerging markets was Citadel Capital Managing Director Amr El Barbary.

“Today, Africa has a new generation of young leaders who speak the language of the private sector. They have a global frame of reference and understand that their nations’ balance sheet constraints make it very difficult for them to meet the aspirations of fast-growing populations. As a result, they are opening previously hands-off strategic sectors to the private sector, including power generation, energy distribution, refining and large-scale transportation projects,” said El Barbary. “When you couple this with an un-paralleled commodities boom, a supportive macroeconomic environment and a massive, untapped consumer market, you have excellent opportunities for private equity investors,” he adds.

“While the ability to source and structure deals is key, execution is the core to maximizing your chances of outsized returns, which demands a trusted on-the-ground GP. In other words, the best returns come from those who know the ground best,” said El Barbary.

Citadel Capital has raised equity and debt in 2011 of more than US$ 500 mn, the vast majority of it from international institutional investors and the lion’s share of that sum coming from DFIs.


Citadel Capital (CCAP.CA on the Egyptian Stock Exchange) is the leading private equity firm 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. The firm’s 19 OSFs control Platform Companies with investments of US$ 9.0 billion in 15 countries spanning 15 industries, including mining, cement, transportation, food and energy. Since 2004, Citadel Capital has generated more than US$ 2.2 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 (2006-2011, as ranked by Private Equity International). For more information, please visit www.citadelcapital.com.

For more information, please contact:
Ms. Ghada Hammouda
Head of Corporate Communications
Citadel Capital (S.A.E.)

g...@qalaaholdings.com (click to reveal this email)

Tel: +20 2 2791-4440 
Fax: +20 22 791-4448
Mobile: +20 10 6662-0002