Africa’s Macro Fundamentals Present a Compelling Investment Thesis for Long Term Investors



·         Citadel Capital Managing Director Karim Sadek participated in the opening panel of the EMPEA/FT “Private Equity in Africa” conference to discuss factors driving economic opportunities on the continent and the investment opportunities that they present

Karim Sadek, Managing Director of Citadel Capital (CCAP.CA on the EGX), the leading investment company in Africa and the Middle East with US$ 9.5 billion in investments under control, participated in a panel discussion entitled “Africa’s Economic Promise” at the 2013 EMPEA/FT Private Equity in Africa conference in London.   

 “The World Economic Forum estimates that the GDP of sub-Saharan Africa could increase by 35.7% by 2017 to reach US$ 1.9 trillion. When combined with factors such as a one billion strong consumer market, a large working age population and a commodities boom that is fueling exports, Africa is already attracting unprecedented levels of FDI, said Citadel Capital Managing Director Karim Sadek.

 “Supportive policy makers are also starting to make things easier for investors. Today, governments across the region are opening previously hands-off strategic sectors such as power generation, energy distribution, refining and large transportation projects to private equity investors,” he added. 

Citadel Capital, a pioneer investor in Africa’s infrastructure, is currently in the process of a strategic transformation from a private equity firm into a regional investment holding company focusing on five core industries, including energy, transportation, agrifoods, mining, and cement. As an investment holding company Citadel Capital is focused on a specific set of sectors and themes within its core African geography primarily in North and East Africa. The new holding company structure allows Citadel Capital to pursue longer-term strategies where it can add greater value.

 “Our transformation into an investment holding company and the change in strategy that this entails is particularly well suited to the nature of our current and future investments in Africa,” said Sadek. “As large-scale, long-term investors in Africa’s infrastructure we are now better able to bring in the capital and expertise needed to improve Africa’s competitive advantage in the global economy.”

 The firm’s footprint and emphasis remains unchanged: large-scale investments across Egypt, East Africa and North Africa. Citadel Capital’s investments in Africa not only make sense for firm but also contribute to the economic development of the continent as a whole. 

 “As one of the few large-scale firms actively investing in Africa in industries that are of vital importance to regional governments, we hope to continue receiving widespread regional and international support to deliver on and grow our investments, which help governments tackle pressing national problems. Achieving growth is important, but it must be inclusive growth for a larger portion of the population,” said Sadek.

 Citadel Capital’s African investments include Rift Valley Railways (RVR), the national railway of Kenya and Uganda. As the operator of RVR, Citadel Capital and its co-investors are implementing a turnaround program, which includes an upgrade of operational systems, a rehabilitation of existing assets and the addition of new assets to the fleet.

 RVR recently completed the building of 73 kilometers of new railway track between Mombasa and Nairobi costing US$20 million (KES 1.7 billion [Kenyan Shillings, kshs]) to improve the reliability and speed of cargo delivery by rail from Mombasa. Completion of the railway modernization project has reduced cargo delivery time between Mombasa and Nairobi by six hours through rebuilding the most badly rundown sections, which were responsible for 60% of blockage time on the rail line.