Posts Tagged “Citadel Capital”

SuperReturn Africa 2010 - A full news roundup

December 6, 2020

SuperReturn Africa 2010 drew to a close last week and we would like to thank all the delegates, speakers and sponsors for making the conference a very successful and hugely enjoyable event.

In addition to the coverage of the event, we’ve gathered the leading articles and commentary from business news websites to give you a comprehensive review of big industry issues tackled this year.

A Twitter roundup

@SuperReturn: Badreldin: 300-400 HNWI & families been “doing the tour” investing Asia/Latam. #MENA must capitalize group’s next investing spree. #sraf10

@SuperReturnKate: Room absolutely full at SuperReturn Africa for Egypt Summit. Clearly a great deal of interest in the country

@SuperReturnKate: Egypt; there is something in it for everyone says Mark Rorison of CI Capital at SuperReturn Africa, Cairo

@SuperReturnKate: Many investors planning on investing in Egypt in next 2 years. Show of hands at SuperReturn Africa Egypt Summit #SRAF10

@DailyNewsEgypt: SuperReturn Africa highlights investment opportunities in Egypt http://bit.ly/g1k8w9

@SuperReturn: Our key markets in the region are Turkey, Egypt and Saudi; Hassan El-Khatib of The Carlyle Group speaking at SuperReturn Africa #sraf10

@SuperReturn: Mansour Kelada Antoun of Vantage Capital compares Egypt and S. Africa at SuperReturn Africa. What parallels are there for investment #sraf10

@SuperReturnKate: Asian investors looking at Egypt as a route into Africa from Egyptian platform. Karim Helal speaking at SuperReturn Africa #sraf10

@AhramEgyptDaily: Private equity competition rife in region:Speaking @ #SuperReturn #Africa — a private equity & venture ca #Egypt http://bit.ly/g5q6qQ

@SuperReturnKate: SuperReturn africa kicks off with 200 delegates from Africa, Europe, Asia, Middle East and US #sraf10

@Cairo_News: Citadel Capital hosts inaugural SuperReturn Africa conference in Cairo http://tf.to/y9s

@SuperReturn: Journalists report on traffic accidents and not traffic says Richard Dowden, Africa Society at SuperReturn Africa #sraf10

@SuperReturnKate: Citadel Capital creating transport corridor between Cairo and Mombasa detailed by Ahmed Heikel. Fascinating project - wish them well #sraf10

@SuperReturnKate: What changed Africa? Number one was China. Economically very good for Africa, says Richard Dowden #sraf10

@SuperReturn: Chinese can take the heat. Africa is no problem for them according to Richard Dowden #sraf10

@SuperReturnKate: Number 2 agent for change the mobile phone says Richard Dowden #sraf10

@SuperReturnKate: If you don’t get in now you will regret it says Richard Dowden at SuperReturn Africa #sraf10

@SuperReturn: Ecobank is a bet on Africa says Arnold Ekpe at SuperReturn Africa #sraf10

@SuperReturnKate: Citadel Capital drinks reception at SuperReturn absolutely beautiful on roof of hotel overlooking Nile. After parties also rocking #sraf10

@SuperReturnKate: Bob Geldof to speak today at SuperReturn Africa - we are all excited and star struck #sraf10

@SuperReturn: Financial crisis less severe in South Africa than US Europe says Colin Rezek of Vantage Capital at SuperReturn Africa #sraf10

@SuperReturn: There are several funds of funds here at this conference which is a good sign says Barbara Brereton, OPIC at SuperReturn Africa #sraf10

@SuperReturnKate: Sarah Yang of China Development Bank now speaking at SuperReturn Africa in Cairo #sraf10

@SuperReturn: We need your help in finding projects says Sarah Yang of China Development Bank speaking at SuperReturn Africa #sraf10

@SuperReturn: It is a myth that we are not getting good returns from developed market private equity says Janusz Heath of Capital Dynamics #sraf10

@SuperReturnKate: It is pressure from our investors that is making us invest in Africa. They are asking us about it says Pat Dinneen Siguler Guff #sraf10

@SuperReturnKate: International LP panel say they are here to gather information. Definitely come to the right place SuperReturn Africa #sraf10

@SuperReturn: Shopping malls are really good for development; Jean Marc Savi de Tove CDC Group speaking at SuperReturn Africa #sraf10

@SuperReturnKate: Sir Bob Geldof giving an inspirational speech at SuperReturn Africa #sraf10

@SuperReturnKate: Makes conference attendees realise that what they are doing is phenomenally important #sraf10

@SuperReturn: SuperReturn Africa wraps up 3 days of truly inspirational discussion. If you are not in Africa yet, you should be. We are! #sraf10

@SuperReturnKate: Off with conference team for night out in Cairo. Delegates have been very helpful with top tips of places to go. #sraf10

@SuperReturnKate: Fog in Cairo has been pretty bad the last couple of days. Hope we make it out. What about snow in Heathrow? Yikes! #sraf10

@SuperReturnKate: May be here longer than anticipated. Time for a camel ride methinks? #sraf10

Press Coverage

Citadel Capital - Citadel Capital Hosts the Inaugural SuperReturn Africa — A Landmark Event on the Continent’s Private Investment Outlook

Citadel Capital (CCAP.CA on the Egyptian Stock Exchange), the leading private equity firm in the Middle East and Africa, is lead sponsor of the inaugural SuperReturn Africa conference in Cairo this week. The three day event taking place from 29 November to 1st December 2010 at the Fairmont Nile City is a response to rapidly rising global interest in investment opportunities driven by robust long-term growth expectations for the continent.

“It is imperative that investors look beyond past perceptions to realize that today’s economic reality is fundamentally different than any in memory. The world economy is witnessing a fundamental structural shift toward the developing world,” said Ahmed Heikal, Chairman and Founder of Citadel Capital, in opening remarks. (More here).

The Daily News Egypt - SuperReturn Africa: Private equity conference debuts in Egypt

CAIRO: Expectations are high for the first SuperReturn Africa conference, which kicks off Nov. 29 and goes through Dec. 1 in Cairo. The three-day event, to be held at the Fairmont Nile City hotel, will begin with opening remarks by the chairman of private equity firm Citadel Capital and will focus on state of play and potential for private equity and venture capital.

Representatives from Citadel Capital, CI Capital, the African Development Bank, the International Finance Corporation and many more will be on hand to offer industry insight. (More here).

The Daily News Egypt- SuperReturn Africa highlights investment opportunities in Egypt

CAIRO: “Private equity opportunities are tremendous,” Abdalla ElEbiary, Citadel Capital managing director, said at the SuperReturn African 2010 conference. The three-day private equity and venture capital conference, which opened Monday, is taking place in Africa for the first time.

ElEbiary noted that the Egyptian government has been diminishing its role in providing goods, while demand for them as well as services has been expanding due to a burgeoning population, which is maturing as a consumer, as well. (More here).

Middle East Newswire - SuperReturn Africa 2010 Conference Emphasizes Egyptian Investment Opportunities

On Monday, the three-day private equity and venture capital conference opened Monday, for its first time in Africa. Abdalla ElEbiary, Citadel Capital managing director, said that “Private equity opportunities are tremendous” in Egypt.

Ahmed Badreldin, executive director of Abraaj Capital, said that his company is investing in the healthcare industry.  Abraaj already owns a 50 percent share in a Turkish hospital group. (More here).

The Daily News Egypt - CI Capital’s Karim Helal on emerging markets’ private equity allure

‘…Helal’s firm, amongst others, is sponsoring the upcoming SuperReturn Africa conference, a private equity and venture capital focused event, from Nov. 29 to Dec. 1 in Cairo. The organizers, Helal said, wanted an Africa-focused conference because the continent is considered the “last consumer frontier.”

Seeking to capitalize on an opportunity, Helal helped lure the conference to Egypt rather than Johannesburg, South Africa as was initially intended, noting that via his connections to the event’s organizers, he was able to persuade them of Egypt’s key significance to the rest of the continent’s economy. (More here).

The Daily News Egypt - Private equity competition rife in the region

The private equity market is growing too fast, there is only so much ‘sand in the box,’ and there is more competition than before in the market,” Karim Sadek, managing director of Citadel Capital, said Tuesday.

Speaking at the SuperReturn Africa — a private equity and venture capital conference taking place for the first time in Egypt — Sadek added that “it will take time for people to get used to investing” on the continent. (More here).

Post Under: General

Spotlight Series: Stephen Murphy, Citadel Capital on the MENA region.

November 22, 2020

Stephen Murphy, Managing Director, Citadel Capital participated in and won the Quickfire Showcase.  In an interview for the Spotlight Series, Stephen explained the attractions of the MENA region, amongst them its limited local competition.

Post Under: Africa

Spotlight series: Stephen G. Pagliuca explains why it is early days for the private equity industry and discusses the exciting times ahead.

November 5, 2020

Stephen G Pagliuca, Managing Director, Bain Capital, spoke on ‘The New Global Economy.’

He also took part in an expert panel debate entitled ‘Back to Basics. Is This The End Of The Mega Fund? How Are GPs Adjusting To A Post-Leverage World & How Will They Generate Value.’
Other experts who took part were Steven Costabile, Managing Director, Head of Private Equity Funds Group, Pinebridge Investments, Hisham El-Khazindar, Managing Director & Co-Founder, Citadel Capital and Daniel H. Mudd, Chief Executive Officer, Fortress Investment Group.

Spotlight series: Dr. Ahmed Heikal discusses lessons learnt investing in MENA.

November 4, 2020

Dr. Ahmed Heikal Chairman & Founder, Citadel Capital, spoke on ‘Investing in Middle East And Africa: Lessons learned. An Industry Veteran Distills A Handful Of Lessons Learned That Will Benefit Any Firm Looking To Push Into The Final Frontiers Of The Regional Industry.’

In an interview for the Spotlight series with Dori Dana-Haeri, Acrostic, Ahmed discusses lessons learnt investing in MENA.

Post Under: Middle East

SuperReturn Middle East 2010 - full news round up.

October 21, 2020

As SuperReturn Middle East closes in Abu Dhabi for another year, we would like to thank all the delegates, speakers and sponsors for making the conference a very sucessful and hugely enjoyable event.

In addition to the coverage of the event,  we’ve gathered the leading articles and commentary from the business news websites to give you a comprehensive review of big industry issues tackled this year.

We have captured a series of video interviews with some of the industry leaders including Karim El-Solh, Dr Ahmed Heikal, Daniel Mudd and Steve Pagliuca which will be posted on this site over the coming weeks.   To make sure you don’t miss out, either add the RSS feed to your reader or sign up for email alerts.

A Twitter round up:

@SuperReturnKate Thomas McHale of American Capital wins the SuperReturn Middle East QuickFire showcase #srme10

@AymanHAK Interesting discussion at SuperReturns on move away from blind pool funds&to co-investment models. Days of high management fees gone #SRME10

@hbgholdings Michael Toxvaerd of HBG Holdings joins SME private equity panel on Day 1 of SuperReturn Middle East in Abu Dhabi #hbgholdings

@SRAntonia Lord Charles Falconer gives his perspective on what govts need to do now #srme10 http://yfrog.com/mws30ej

@SuperReturnKate David Rubenstein mentions booming private equity conferences. I must say I agree with the great man. Biased? Moi? #srme10

@SuperReturnKate The shift in economic balance is perhaps irreversible. Karim Helal, CI on silk route as lifeline of global trade at SuperReturn ME #srme10

@SuperReturn PE funding levels won’t peak again until about 2014 so say industry elite #srme10

@SuperReturn AymanHAK 16% said distressed strategies and 15% venture capital #srme10

@SuperReturn David Rubenstein Carlyle Group shares top 10 leading global trends #srme10 http://yfrog.com/2faimkj

@SuperReturn Samir A Samaan Invest AD remains bullish about the industry in MENA #srme10 http://yfrog.com/6r975aj

@SuperReturn “Fund are diversifying by geography and type; it will make them stronger” Steve Pagliuca on PE’s contribution to new global economy #srme10

@SuperReturn Josh Lerner “not small is beautiful but focus is beautiful” for MENA PE investors #srme10

@SuperReturn Global PE titans get back to basics #srme10 http://yfrog.com/2sweivj

@SuperReturn Jon Moulton Better Capital gets things started on day 2 of SuperReturn Middle East #srme10 http://yfrog.com/12hx2ej

@SRAntonia Iraq is open for business as next hot market. Breaking news at #srme10 2:26 PM Oct 18th via Twitter for BlackBerry® Retweeted by SuperReturn

@SuperReturn Richard Portes “we wont return to normal, we don’t know what it is anymore.” #srme10

@SuperReturn Global imbalances dangerous? search for yield overwhelms financial intermediation systems - major cause of the crisis. #srme10

@SuperReturn Richard Portes “we avoided the great depression & executed the great escape” #srme10 http://yfrog.com/11f7laj

@SuperReturn but there is some long term damage #srme10

@SuperReturn Need to differentiate the information question into data and insight. Data is so difficult the insight question get puts aside. #srme10

@SuperReturn Why is it so hard for the GP/ LPs to agree on the single format for communication and metrics to view the portfolio? #srme10

@SuperReturn DD and fund raising never stops… keep your GP/LP relationship for the next fund raising by developing trust/ transparency. #srme10

@SuperReturn Need segmentation not just in PE but in Family Office – one size will not fit all. #srme10

@SuperReturn Financial engineering & operational excellence are the key value adds that the PE model brings to MENA’s privately held businesses. #srme10

@SuperReturn Look for your opportunities in your biggest challenges. #srme10

@SuperReturn Omar Lodhi Abraaj tells delegates how to take companies to the next level. #srme10 http://yfrog.com/51uikj

@SuperReturn “We are not a retirement destination, seek out those who seek challenges” Dr Heikal Citadel tip for mgmt training & recruitment #srme10

@SuperReturn 11 lessons from Dr Heikal Citadel Capital. #srme10 http://yfrog.com/meqmhxj

@SuperReturn Ammar Alkhudairy addresses the delegates on new paradigm shifts. #srme10 http://yfrog.com/71t6ij

@habibahamid Abu Dhabi is awash with private equity folks, who are in town for the region’s Super Return conference http://ow.ly/2UKKs

@Reuters_Deals Arabtec seals joint venture deal with Egypt’s Amer http://reut.rs/c4RtpH

@SuperReturnKate Patricia Dinneen advice to LPs when GPs are having problems: infiltrate! At SuperReturn Middle East #srme10

@Yeseniaws PREVIEW-Mideast PE eyes return to SME roots * Mideast PE sector gather at annual SuperReturn conference http://tiny.ly/iIbQ

@SuperReturnKate Talk to the junior investment partners. Gordon Hargraves on due diligence at SuperReturn Middle East today #SRME10

@SuperReturnKate There is a fine line between sharp elbows and unethical business behaviour. Gordon Hargraves at SuperReturn Middle East #SRME10

@ame_finance Deloitte releases Mena Private Equity Confidence Survey 2010 http://bit.ly/9HgcnS

@SuperReturn Mark O’Hare interviews Mark Boyle Northwestern Mut Cap about LP opinions #srme10 http://yfrog.com/j4w0blj

@SuperReturn “The best time to invest is when its hardest to raise money” Catherine Weir’s message to MENA LPs at summit in Abu Dhabi #SRME10

@SuperReturn Catherine Weir, Citibank at LP summit to look at what investors are looking for #srme10 http://yfrog.com/edm0cj

@ame_finance Abu Dhabi plans new export agency http://bit.ly/caUg6Z

@SuperReturn Will trend for LP direct investment increase or disappear? Jury’s out at LP summit. #srme10

@SuperReturn Do intl LPs see MENA as just a source rather than a destination for capital? Education need to showcase opportunities? #srme10

@SuperReturn LPs were happy with public market + 2% in 07. More like >4% now. But belief in PE mrkts is still strong #srme10

@SuperReturn 19% Fund mgrs closing in 09 achieved target. Improved this year to 35% #srme10

@SRAntonia Is lack of competition between GPs the biggest problems for Middle Eastern LPs? Live at LP summit #srme10

@SuperReturn Mark O’Hare Prequin says deals and exits in MENA recovering. #srme10

@SuperReturn Its clearly an ill wind! MENA PE firms can now attract great senr mgt talent in the fallout from the financial crisis. #srme10.

@SuperReturn Exiting MENA? Egypt tends to be most open & most dev market #srme10

@SuperReturn Why is only 10% of capital directed at Emerg Mkts coming to MENA? Are all levers of value in place? #srme10

@SuperReturn Dry powder in MENA $28 billion? Closer to $7 billion according to Stephen Murphy Citadel Capital. #srme10

@SuperReturn Richard Rivlin Bladenmore and chairman of the LP summit welcomes delegates #srme10 http://yfrog.com/5zy0wwj

@SuperReturn Delegates arrive for morning coffee at special LP summit #srme10 http://yfrog.com/4c4gmaj

@zulfi_hydari Private Equity Summit: SuperReturn Middle East 2010 in Abu Dhabi Oct 17 - 20 http://t.co/MkF4cFe via @PrivateEquityME

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Press coverage

Amwal AlKhaleej happy with Damas deal

Amwel AlKhaleej, which earlier this year sued Damas Loading… in a $22-million (Dh81 million) claim, is satisfied with the recently concluded out-of-court settlement, its top executive said.  Ammar AlKhudairy, managing director of the Saudi-based private equity firm said they were able to get their “money back” in a deal that was in line with the initial compensation sought by the firm.  Part of the settlement was the transfer of 20 million shares to Amwal AlKhaleej on August 19 at a price of 16 cents a share or a total value of $3.2 million and an increase in Amwal’s shareholding in the company to 13.26 per cent from 11.23 per cent after the transaction.

“That is only a part of a bigger settlement, which was done to our satisfaction,” AlKhudairy said, during the sidelines of the SuperReturn Middle East conference yesterday. He declined to comment on the wider settlement.  (more here)

MENA soveriegn funds should invest closers to home says Citadel Capital Chairman.

Middle Eastern and North African (MENA) sovereign wealth funds are over-focusing on deals in the West and should be paying more attention to opportunities in their own back yards, according to Ahmed Heikal, founder and chairman of Egyptian private equity firm Citadel Capital.

Speaking at the SuperReturn Middle East conference in Abu Dhabi, Heikal, whose firm was the beneficiary of a $100m commitment from US trade agency the Overseas Private Investment Corporation earlier this year, said that the wealthy MENA state investment bodies are missing deals in the region which are being picked up on by Western investors. (more here)

Gulf Capital Looks To Close Saudi Food Deal By Year End

ABU DHABI (Zawya Dow Jones)-Abu Dhabi-based private equity firm Gulf Capital, which raised the largest fund in the Middle East last year, expects to close a deal in Saudi Arabia’s food sector by the end of the year, its chief executive officer said Monday.

“We have a forthcoming deal in the food sector” in Saudi Arabia, Karim El- Solh told Zawya Dow Jones on the sidelines of the Super Return Middle East conference.  The firm’s GC Equity Partners Fund II is 37% invested, Sold said. “The food deal will take us to the 40% mark.” (more here)

Middle Eastern entrepreneurs can expect a knock at the door from regional private equity bosses

When the region’s leading deal makers and investors gather in Abu Dhabi for the 4th Annual SuperReturn Middle East Private Equity Summit from October 18th - 20th, we can expect some discussion about the next big trend in Middle East private equity.   In previous years the focus was largely on mega leveraged buyouts but this year attention will most likely turn to small and midmarket private equity. A confluence of factors is forcing the shift from larger to smaller deals. The most obvious factor is the collapse in fundraising activity. Fund managers raised only US$1.06bn in 2009 compared to a near-record US$5.4 billion in 2008. This has led to smaller funds being raised that are taking almost twice as long to close. It is estimated that average fund size will shrink from pre-2008 levels of $350m down to approximately $200m. The impact on regional PE firms of smaller funds combined with limited availability of debt finance will be to shift their focus from larger deals to smaller deals with average deal size of approximately $25 million. (more here)

Citadel Capital Chairman speaks of investing closer to home at SuperReturn Abu Dhabi

Arab sovereign wealth funds seeking to maximize their returns in a still-shaky global economy need to examine opportunities at home and in their own back yards, not only in the West, an industry veteran told a gathering of top regional private equity leaders in Abu Dhabi today. (more here)

Citadel Capital Looks Outside ME For Funds; PE Risk Appetite Weak

Cairo-based private equity firm Citadel Capital has sourced most its funds this year from outside the Middle East as risk appetite for private equity investment in the region remains weak, the company’s chairman said Monday.

“Citadel Capital this year raised $3.5 billion in debt and equity and 80% has come from outside the region,” founder and chairman Ahmed Heikal told the Super Return Middle East private equity conference in Abu Dhabi. “At this point in time risk appetite is not there yet.” (more here)

Buyout figures take on fees

ABU DHABI, United Arab Emirates—Two of the private-equity industry’s biggest names have called for an overhaul of buyout firms’ lucrative fee model, with the best charging more and the weakest conceding ground to investors.

David Rubenstein, the co-founder of U.S.-based private-equity firm Carlyle Group LP, and Better Capital LLP founder Jon Moulton added their voices to the fee debate, in some of the strongest comments made by buyout managers about their lucrative income stream. (more here)

Post Under: Middle East

The titans of Private Equity go back to basics

October 19, 2020

Day 2 of SuperReturn Middle East saw a gathering of a particularly august panel of private equity leaders.  Joining Josh Lerner, Harvard Business School was Steven Costabile, Pineridge Investments; Hisham El-Khazindar, Citadel Capital; Steve Pagliuca, Bain Capital and Daniel H Mudd, Fortress Investment Group to debate the trend to “back to basics”.

First up was Steve Pagliuca to review issues in portfolios and how GPs are resolving the problems.  Steve said the difference between the issues of the ‘80s and ‘90s and now is that the debt is structured in a more patient way.   In the ‘90s if you defaulted, the banks would move in straight away.

This patience has allowed companies like Bain Capital to send in specialists to work with the portfolio companies on working capital and cost reduction programmes, to great positive effect.  Now the companies are running lean and well.  The big fear is a double dip recession and how would the companies cope.

Hisham commented that the MENA region was relatively insulated from the crisis with the exception of Dubai but that operationally there are lessons to be learned.  A shift from minority holdings to significant or majority holding in PE companies shows an increased understanding of the importance of control and involvement.

He argued that not all operational improvements are about cost cutting and downsizing but about making sure you get financing to bolt on businesses that can expand and improve your portfolio.

Additionally, local GPs firms are learning the importance of management experience that extends beyond the financial expertise to do deals to the ability to develop and grow the portfolio businesses.  The acquisition of talented managers with backgrounds in engineering and management consultancy should be fast tracked.

Josh then turned to Daniel Mudd and asked what private equity has learned from the crisis. For Daniel, the bulk of the “selling at gunpoint” deleveraging has past so now its time for corporations to look at their portfolios and decide what business they are in, what business they want to be in and start to restructure their portfolios accordingly, which may often involve sales to private equity firms.  Another positive outcome of the crisis is that banks are better able to look at private equity companies, assess them and re-term the loans constructively.

Steven Costabile took up the discussion on whether we could expect an extended period of smaller deals.  He believes that most institutional investors now understand that just because you can do a deal, doesn’t mean you should.  While many institutional investors say they are looking for absolute returns, what they are really looking for is relative returns, relative to the public markets.  And there the bar has been lowered.  It will be 3-4 years before we get back the old levels.  This is the perfect time for platform acquisition and there are lots of opportunities.

So to summarise in the words of Josh Lerner, the immediate future for private equity is “not small is beautiful but focus is beautiful”

Post Under: Middle East

11 lessons for firms pushing the final frontier

October 18, 2020

Dr Ahmed Heikal, Chairman and founder of Citadel Capital gave an entertaining presentation to the delegates contending that the risks of investing in MENA are balanced by the advantages.

“If you have little stomach for risk, go to Switzerland”, said Dr Heikal, “If you want to build highways, energy distribution, an agribusiness that will deliver returns over 10 years, you’re in the right room”.

Right now, Citadel is looking at countries in the region that have large consumer bases, are rich in natural resources and who’s banking structures are evolved.  Egypt, Syria, Algeria, Nigeria and South Africa feature strongly for these reasons.  So what are the lessons then?

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Lesson 1 – Have a grand vision

Don’t accumulate insignificant stakes, if you are convinced then go for it.

Lesson 2 – Have a clear strategy

Know how you are going to grow by understanding the drivers of opportunity namely

Deregulation

Cost competitive inputs

Growth of consumer demand/ unfulfilled needs

Risk arbitrage

Lesson 3 - Don’t skimp on management training

Seek out the best management expertise available and more of it than you need.  MENA is not a retirement destination, look for managers who seek challenges and challenge them.  This is key not just to structuring and executing deals but for keeping them on track during the growth phase.

Lesson 4 - Do give government a second look

Governments in the MENA region have never been more private sector friendly.  This is driven by stretched balance sheets and rising expectations from a fast-growing middle class.

Lesson 5 - Don’t be blinded by the commodities boom

Lesson 6 - Do give yourself some slack.

Have sufficient management depth to invest in regular communications with LPs, bankers, shareholders and multilaterals.  This communication will be a key driver of your ongoing success.

Lesson 7 - Don’t be blinkered in considering your sources of finance.

Regional banks are willing and able to fund mid sized project.

Lesson 8 - Resist the urge to begin a project without full financing in place. (Dr Heikal placed particular emphasis on this one!)

Lesson 9 - Be selective

Take the time you need to explore and plan the right deals.  It is not a case of too much capital chasing too few deals but rather significantly more deals on offer than there is capital available.  Never be afraid to say no.

Lesson 10 - Do invest in governance to ensure

Origination in deals

Control cost of capital

Identification and correlation of risk enabling quick and well informed decisions

Alignment of interests with your LPs.

Lesson 11 - Above all, be patient.

The most compelling plays with the highest potential returns are large deals that take time to put together and time to mature to exit.  Consider consumer industry, basic industries, commodities and infrastructure.

IF you’re not willing to bet on 10 year investments, this may not be the place for you.

Post Under: Middle East

“Dry powder” and changing LP attitudes

October 17, 2020

In two very interesting presentations to open the LP summit at SuperReturn Middle East in Abu Dhabi this year, both Stephen Murphy of Citadel Capital and Mark O’Hare of Prequin looked at the shape of the MENA region’s PE market from the peaks of 2007, through the financial crisis to now.

Stephen Murphy prefaced his presentation by clarifying why he as a GP should be addressing a summit of LPs.  Citadel adopt the Hedge Fund model; they always invest in their own funds.   His mission was to get to the root of the “dry powder” debate.  General report sets it at $28 billion but what is that made up of and what is the real amount available for investment right now?  A recent report from Booz & Capital set the figure at a more modest $11 billion.  By applying some rigor Stephen arrived at a figure of $7 billion.

Another question troubling Stephen was why does only 10% of the capital invested in Emerging Markets find its way to the MENA region.  Could it be that not all the levers for value growth in place and there isn’t a clear exit strategy.  Local stock markets tend not to perform as well as their international counterparts.  Added to that is the competition from sovereign wealth funds.

An issue for International LPs could be the quality and expertise of some of the local senior management talent.  This is where the recent crisis could benefit the region.  The available talent pool for experienced and seasoned senior executives just got larger and MENA is a real and attractive option for many.

But the biggest question of all is “what will the return on existing investments be?”

Mark O’Hare looked at the changing LP attitudes and behaviours.  He started with a summary overview of private equity fundraising

1. Deals and exits are recovering
2. LPs “sticking with the programme”
3. GPs in compelling  propositions are succeeding

If you compare the private equity asset class with the available investment options on the public markets, private equity will outperform over a 5 year period.  In shorter time spans, the public market has more to offer, but approval ratings for private equity are still high amongst investors.

Between 2007 and now, the % for LPs expectations being exceeded has reduced from 24 to 9 but % meeting expectations remained reasonably static from 74 to 70.  What has changed in the expected return.  In 2007, public markets + 2% was considered acceptable, now its > 4%.

Turning to re-ups, only 13% of LPs will be reinvesting with all their managers, while 85% plan to stay with some existing managers.  When questioned about where he thought the 85% planned to migrate their capital not recommitted, Mark gave his personal view that LPs were reducing the spread of their GP pool not their capital invested in private equity.

The funds of choice with LPs are mid-market buyouts and distressed private equity but Mark’s believes that the mega funds like Blackstone are on the rise again.

And finally, Mark polled the LPs audience about their view on the emerging trend of direct investment by LPs; will it increase or fade out?  The jury’s out I’m afraid!

In two very interesting presentations to open the LP summit at SuperReturn Middle East in Abu Dhabi this year, both Stephen Murphy of Citadel Capital and Mark O’Hare of Prequin looked at the shape of the MENA region’s PE market from the peaks of 2007, through the financial crisis to now.

Stephen Murphy prefaced his presentation by clarifying why he as a GP should be addressing a summit of LPs.  Citadel adopt the Hedge Fund model; they always invest in their own funds.   His mission was to get to the root of the “dry powder” debate.  General report sets it at $28 billion but what is that made up of and what is the real amount available for investment right now?  A recent report from Booz & Capital set the figure at a more modest $11 billion.  By applying some rigor Stephen arrived at a figure of $7 billion.

Another question troubling Stephen was why does only 10% of the capital invested in Emerging Markets find its way to the MENA region.  Could it be that not all the levers for value growth in place and there isn’t a clear exit strategy.  Local stock markets tend not to perform as well as their international counterparts.  Added to that is the competition from sovereign wealth funds.

An issue for International LPs could be the quality and expertise of some of the local senior management talent.  This is where the recent crisis could benefit the region. The available talent pool for experienced and seasoned senior executives just got larger and MENA is a real and attractive option for many.

But the biggest question of all is “what will the return on existing investments be?”

Mark O’Hare looked at the changing LP attitudes and behaviours. He started with a summary overview of private equity fundraising

i. Deals and exits are recovering

ii. LPs “sticking with the programme”

iii. GPs in compelling propositions are succeeding

If you compare the private equity asset class with the available investment options on the public markets, private equity will outperform over a 5 year period. In shorter time spans, the public market has more to offer, but approval ratings for private equity are still high amongst investors.

Between 2007 and now, the % for LPs expectations being exceeded has reduced from 24 to 9 but % meeting expectations remained reasonably static from 74 to 70. What has changed in the expected return. In 2007, public markets + 2% was considered acceptable, now its > 4%.

Turning to re-ups, only 13% of LPs will be reinvesting with all their managers, while 85% plan to stay with some existing managers. When questioned about where he thought the 85% planned to migrate their capital not recommitted, Mark gave his personal view that LPs were reducing the spread of their GP pool not their capital invested in private equity.

The funds of choice with LPs are mid-market buyouts and distressed private equity but Mark’s believes that the mega funds like Blackstone are on the rise again.

And finally, Mark polled the LPs audience about their view on the emerging trend of direct investment by LPs; will it increase or fade out? The jury’s out I’m afraid!

Post Under: Middle East


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