Despite a challenging regional environment Citadel Capital, raised new equity and debt of $265 million for platform and portfolio companies while the firm’s standalone loss narrows 17.3% quarter-on-quarter to $3.5 million.
Citadel Capital added $ 175.6 million in long-term capital in October’s rights issue and is now finalizing $ 150 million in OPIC-backed financing.
Citadel Capital (CCAP.CA on the Egyptian Stock Exchange), the leading private equity firm in the Middle East and Africa, announced today its standalone financial results for the third quarter of 2011. Highlights of the 3Q11 Business Review include the addition of $ 265.5 million in new investments under control (equity and debt), including $ 101.6 million in new assets under management.
In the three months ending September 2011, the firm thus reports a 3.1% quarter-on-quarter rise in total investments under control to $ 9 billion, a 2.5% rise in assets under management (AUM) to $ 4.2 billion and a 17.3% narrowing of its standalone loss quarter-on-quarter.
“Citadel Capital is on track to close this tumultuous year on very solid footing,” said Citadel Capital Chairman and Founder Ahmed Heikal.
“Cost-cutting at the firm and platform company levels has allowed us to preserve cash, while new fundraising from international limited partners and regional co-investors alike has seen us add important equity and debt to key platform investments. The capital increase concluded in October has added $175.6 million in long-term capital to our 4Q11 balance sheet and, moreover, the finance guarantee approved in 4Q11 by the board of directors of the US Overseas Private Investment Corporation sees us in the final stages of securing $150 million in long-term finance.
“While we enter 2012 on a cautious footing,” Heikal continued, “we do so mindful that our portfolio is firmly on the right side of macroeconomic trends. We are also cognizant that there will be significant opportunities to add value to our portfolio in a year that we expect will be transformative for many of the economies in which we invest.”
Meanwhile, the drawdown of $38.7 million in new fee-earning third-party AUM in 3Q11 into Africa Railways and Nile Logistics has allowed those platform investments to return to Citadel Capital previously advanced funds of $ 9.2 million.
With no exits in the quarter, Citadel Capital reports a standalone net loss of $ 3.5 million for 3Q11 on revenues of $ 2.8 million. This represents a 17.3% narrowing from the $ 4.2 million loss the previous quarter, on the back of lower spending on operating expenses under an ongoing program of cash preservation and cost control. Notably, OPEX spending in 9M11 declined 11.7% year-on-year in absolute terms, while the cash component of OPEX spending declined 31% in the same period. Management has prioritized cash preservation and cost control at both the firm and platform / portfolio levels since the onset of the Egyptian Revolution and will continue to maintain a close watch on costs going forward.
In the nine months ending September 2011, the firm recorded a net standalone loss of $ 12.1 million, on par with expectations in a period with no exits. By comparison, the firm reported a standalone net profit of $ 3.4 million in 9M10, which included exit revenue, revenue from the recovery of pre-operating expenses (absent in 2011 on the back of a slower pace of new business activity), and both advisory fees and interest income related to upstream oil and gas platforms on which management opted to take write-downs at the end of 2010.