Citadel cuts back on ASEC

Citadel cuts back on ASEC
Published: 09 December 2009



Citadel Capital a leading  private equity firm in the Middle East has announced it has  partially exited ASEC Holding, a regional cement production, construction and  engineering firm. Citadel sold a 6% stake in  ASEC Holding and a further 6% in United Foundries to the Emirates  International Investment Company (EIIC) in a deal worth US$55m.

EIIC  a regional investor based in Abu Dhabi, is a long-time limited partner  in a number of Citadel Capital’s OSFs and is a Citadel Capital  shareholder.
 


“This move comes in light of the firm’s strategic  decision to further diversify its already-broad investment footprint to  include new sectors such as solid waste management, where we recently  finalised the acquisition of two companies that have become the nucleus of our  eighteenth Platform Company,” said Citadel Capital Chairman and Founder Ahmed  Heikal.

 “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.”

The deal values ASEC  Holding at EGP 28.50 per share, which Citadel Capital Managing Director and  Co-Founder Hisham El-Khazindar noted, “Is a very fair valuation that reflects  the strong growth potential in ASEC Holding as it continues to expand its  regional network of cement plants as well as its engineering and construction  operations across the Middle East and Africa.


“This transaction reduces Citadel  Capital’s holding in both ASEC Holding and United Foundries to 49% from 55%,”  El-Khazindar continued. “Going below the 50% threshold will allow us to treat  both companies as associates and not subsidiaries. This will become an  important distinction for our shareholders starting with the release of our  4Q 2009 financial results. This move leaves Citadel Capital and its limited  partners in full control of both ASEC Holding and United Foundries, but will  allow us to show Citadel Capital shareholders a clearer picture of our firm’s  financials over time.” After the acquisition, EIIC will hold  10.25% of ASEC Holding and 10.25% of United Foundries. 
 
The news  comes as ASEC Holding’s Portfolio Companies continue to hit important  benchmarks. ASEC Cement, which will control over 12Mt of cement  production capacity per annum by 2013 in five countries spanning from Algeria  to Iraq-Kurdistan, is now entering the final phase of operational testing at  Takamol, its 1.6Mta greenfield grey cement plant in  Sudan. The Takamol plant should begin operations early in 2010.

Earlier this  year, the International Finance Corporation invested US$24m in ASEC  Cement’s Djelfa plant in Algeria, which will supply up to 3.6Mta to Algeria’s fast-growing construction and infrastructure sectors. Construction at Djelfa is now underway, with the first phase set for completion by the end  of the first quarter of 2011.
 


Meanwhile, ASEC Engineering is  actively pursuing new contracts to manage cement plants throughout the region.  ASEC Engineering currently manages close to 15Mta and is a market leader in the field of technical plant management. ESACO, a civil and steel fabrication  firm, has won key civil and mechanical erection contracts this year that will  see it meet or exceed its already ambitious annual growth targets.  



Finally, ARESCO, a turnkey contractor serving the cement,  energy, petrochemical, petroleum and general industrial sectors, announced in  September 2009 that it has completed construction of a second production line  at Sinai Grey Cement’s facility in Al-Arish, Sinai. The US$140m fast-tracked project was completed on budget in just 25 months, well below the  average of 32 months for projects of that kind.