Citadel Capital in $55m partial exit

The Cairo-headquartered private equity firm has trimmed its stake in cement platform company ASEC, selling stakes to one of its LPs.

Citadel Capital has sold a 6 percent stake in cement-focused platform company ASEC Holding and another 6 percent stake in United Foundries Company, an ASEC Holding spin-off, for $55 million, reducing its stakes in both entities to 49 percent.

The stakes were sold to Emirates International Investment Company, a Citadel shareholder and a limited partner in its opportunity specific funds. After the transaction, Abu Dhabi-based Emirates International Investment Company holds a 10.25 percent stake each in ASEC Holding and United Foundries.

The deal values ASEC Holding at EGP28.50 per share ($5.21; €3.54), which Hisham El-Khazindar, Citadel’s managing director and co-founder, said in a statement was a very fair valuation.

The partial exit is part of Citadel’s strategy to diversify its portfolio into sectors such as solid waste management.  “As we gently re-balance our investment allocation, it made sense to execute a partial exit of one of our most important platform companies in a way that establishes a clear valuation,” Ahmed Heikal, the firm’s chairman and founder, said in the statement. 

Cairo-based ASEC Holding controls cement production, construction and engineering assets operating throughout the Middle East and Africa. Its portfolio companies include cement business ASEC Cement, cement plant manager ASEC Engineering, turnkey contractor ARESCO and civil and steel fabrication business ESACO.

In November, Citadel unveiled plans to list 12.5 percent of its shares on the Egyptian Stock Exchange, in a bid to make it easier to raise capital in the future. The firm’s senior management was not selling any shares, Heikal said at the time.

A day later, the firm acquired controlling stakes in solid waste management companies the Egyptian Company for Solid Waste Recycling and the Engineering Tasks Group. The two companies form the core of Citadel Capital’s 18th platform company ENTAG Holding, which is focused on the solid waste management sector. 

Citadel intends to raise at least two new opportunity-specific funds to invest in the Middle East and East Africa, a spokesperson for the firm confirmed to PEI Asia in October. It is unclear if the launch of the sector-specific funds marks a return to Citadel Capital's original strategy of financing deals individually, from its own permanent capital base in platform investments alongside regional co-investors.

The firm departed from that strategy with the launch of its debut institutional fund, the Citadel Capital Joint Investment Fund. In February, Heikal told sister news site the firm was aiming to hold a first close on the fund, which is targeting $500 million, in the second quarter of this year. Presently, the status of this fund is unclear.