Citadel Capital (CCAP.CA on the Egyptian Exchange), the leading investment company in Africa and the Middle East, formally submitted Egyptian Financial Supervisory Authority (EFSA)’s Form 16. The filing seeks regulatory approval to call for an extraordinary general meeting to approve the launch of a USD 529 million capital increase that would see the firm’s paid-in capital rise to USD 1,145 million from USD 615 million.
Citadel Capital’s proposed share issuance is part of the firm’s transformation from the largest private equity firm in Africa into the leading investment company in the region. The proposed capital increase will be used by Citadel Capital to reach 51-100% ownership in the majority of its platforms companies, and in particular in the firm’s subsidiaries in its 5 core industries — energy, transportation, agrifoods, mining and cement. Citadel Capital plans to exit non-core investments over the coming few years as it transforms its business model to become an investment company.
The proposed capital increase will be a key step in a process that will see co-investors and limited partners (LPs) in the firm’s platform companies given the opportunity to synthetically swap their stakes for shares of Citadel Capital. Valuations of the underlying platform companies have been completed by HC Securities (an independent financial consultant certified by EFSA) and accepted by both participating LPs and ratified by shareholders at an ordinary general meeting (OGM) held on 1 June 2013. At the OGM, shareholders also voted to allow Citadel Capital’s Board of Directors to execute the acquisition of the additional stakes in the company’s subsidiaries. These purchases will be settled through the proposed issuance of shares, which participating LPs have undertaken to subscribe to.
Citadel Capital Partners Ltd (CCP), the lead shareholder in the firm and the vehicle through which senior management holds its equity, will participate pro rata in the capital increase. Citadel Capital management notes that an additional capital increase may take place in 2014 to allow for the acquisition of those shares of portfolio companies held by LPs who do not participate in this first round.