Private Equity News & Analysis

'In need of major investment’

Citadel Capital, the Cairo-based private equity firm, recently announced plans to invest up to $400m over the next two years in a range of sectors in East Africa, including infrastructure. InfrastructureInvestor caught up with the firm’s founder and chairman Ahmed Heikal to get the low-down on where the money will go and why – below is an excerpt of the interview.

-

What is the potential for infrastructure-related investment in East Africa and why?
AH: Developments such as the push toward integration under the East African Community banner and its particular emphasis on building the infrastructure necessary to promote intra- and inter-regional trade have seen the potential for infrastructure-related investments increase tremendously.

Heikal: up to $400m to deploy
Africa as a whole is in need of major investment in infrastructure. Underdeveloped road networks and a virtually non-existent river transport sector is a major deterrent to both domestic and inter-African trade. Citadel Capital is fully prepared to bring creative, value-added investments that will fulfill domestic demand, help enhance export potential and ultimately strengthen African economies.

Infrastructure investment, in Africa in particular, is not all about low returns and long horizons and it is about more than seaports, airports and roads. It is about gas distribution. It is about river transportation and logistics. And it is about all those industries that support growing demand for infrastructure, such as cement.

How is the region viewed by other investors? Are there misunderstandings about what the region offers?
AH: As we look to deploy $200 million to $400 million in new capital across East Africa in 2010 to 2012, we are mindful that while much of the world looks at Africa as a pure “commodities play” — leveraging high global commodity prices against relatively accessible untapped natural resources across the continent — we as African investors see it differently. Our view is that African investors must take the lead on large-scale infrastructure and industry investments that will catalyse economic development and have a multiplier effect across regional economies.