DUBAI: Egyptian private equity firm Citadel Capital, which completed a $176 million rights issue on Wednesday, plans to further strengthen its balance sheet in the next three months through fund-raising measures or small disposals.
Citadel is not looking to make any acquisitions or diversify into new industries and will look at consolidating businesses it currently owns, managing director Marwan Elaraby said in an interview.
"The first part is to take care of any perceptions in the market that we have a stretched balance sheet. In turbulent market conditions it is probably wiser to have excess cash on your balance sheet than to risk passing off an opportunity."
Citadel, with $8.7 billion investments under its control, has completed the second round of a $176 million capital increase, adding $120 million in fresh capital to its balance sheet. The proceeds will be used to support existing companies.
Its portfolio includes companies such as Nile Valley Petroleum, an oil and gas exploration company in Sudan, and Taqa Arabia, a Middle Eastern energy distribution group.
It delayed plans for an initial public offering of Taqa Arabia earlier this year, citing lower valuation prospects.
Egypt’s popular uprising knocked confidence in the country’s economy, sent inward investment tumbling and made it harder to raise money for new industrial projects.
Citadel held talks with Dubai firm Abraaj Capital but the talks fell through in July after Abraaj pulled out.
Elaraby said the discussions with Abraaj were related to a buyout of the firm and not a capital raise.
The rights issue, which was approved by shareholders and the Egyptian regulators in August, is the first of several steps the company is taking to add $200 million to its coffers, Chairman Ahmed Heikal said.
He said the extra capital will help the company weather an expected 12 to 18 months of turbulence ahead, and can be used for growth once the business climate improves.
