ASEC Cement, a subsidiary of Citadel Capital, is looking to divest its minority stake in Zahana Cement Company of Algeria.
In a statement released yesterday, Citadel Capital said that Yahia Bachir, director General of Ciments Algerie (GICA) – the Algerian holding company that controls all public-sector entities operating in the building materials sector – has publicly stated that the Algerian state is studying “buying out its Egyptian partner in a cement plant project.” Citadel Capital has confirmed its interest in such an exit and is accordingly pursuing discussions to divest ASEC Cement’s minority stake in Zahana Cement, the statement said.
“We are presently in preliminary talks with GICA with a view to having ASEC Cement exit its minority investment in Zahana. This is in line with our aim going forward of holding only majority stakes in all of our core subsidiaries,” said Ahmed Heikal, Chairman and Founder of Citadel Capital, the leading investment company in Africa and the Middle East,
“A key element of our growth strategy is to reduce risk by focusing on fully controlled investments that have proven to be winners,” Heikal noted. “A rebalancing of the individual holdings of certain subsidiaries will allow us to redeploy capital and thereby open new avenues for growth.”
The talks come in the context of Citadel Capital’s transformation into an investment company that will hold majority stakes in most of its investments in five core industries, namely energy, transportation, agrifoods, mining and cement. The acquisition of majority stakes in select investments is ongoing as a part of the firm’s bid to raise its capital to EGP8bn, an exercise that management expects will be complete in the coming three weeks.
In parallel, Citadel Capital will look to divest non-core holdings over the coming three or more years.
ASEC Cement holds a 35 per cent stake in Zahana, which is located in western Algeria, around 40km from the city of Wahran. Civil works for a new raw mill to take Zahana’s production capacity to approximately 1Mta of clinker and 1.2Mta of cement are complete.
ASEC Cement is a portfolio company of ASEC Holding, Citadel Capital’s subsidiary in the regional industry. Citadel Capital directly and indirectly holds a c.45 per cent stake in ASEC Cement.
In addition to Zahana Cement Co., ASEC Cement holds a c. 68 per cent stake in a 3.6Mta greenfield cement plant near the Algerian city of Djelfa (under construction), as well as stakes in plants including Al-Takamol Cement (Sudan), Misr Qena Cement (Egypt), and ASEC Minya (Egypt) as well as trading and ready-mix arms. ASEC Minya is the group’s most recent plant opening. The 2Mta, US$360m facility caters to high-demand Upper Egypt markets.