Citadel Capital urges GCC investors to expand portfolio into emerging MENA markets

El-Khazindar spoke at a plenary session on GCC investment opportunities at the Private Equity International Middle East Forum 2008 at the Madinat Jumeirah in Dubai.

El-Khazindar said that the emergence of a growing number of developing economies within the region such as Egypt, as well as Algeria, Sudan, and Lybia, with favourable market conditions, including economic liberalisation, sector privatisation and deregulation, make it crucial for GCC investors to expand these frontier markets' weights in their private equity portfolios. 'Not only is the opportunity there; but for GCC investors, given surplus liquidity competing for opportunities in the GCC, I believe it's a must for them to put greater emphasis on the emerging private equity opportunities in the wider region,' he added.

The plenary session gathered key players in the private equity investment sector in the region and tackled how GCC-based firms can expand their portfolios by exploring overseas markets, as well as discussed how those markets can be tapped more strategically.

However, El-Khazindar challenged the audience to not only identify the geographical area or industry sector in which to invest, but more importantly to identify and access those opportunities that will yield the best returns. 'It is key to either develop a strong local presence in these frontier markets, or alternatively to pick the right partners and fund managers with whom to co-invest.'

El-Khazindar cited the example of Citadel Capital, a thriving regional practice with a wide industrial and geographical footprint that has recently established a fully-owned subsidiary in Algeria and is planning another one in Libya to take advantage of opportunities in North Africa.

When asked which sector in the region had the most potential for investments, El-Khazindar expressed a different opinion from what the audience identified as the promising sector - namely infrastructure; he believes the sectors that will yield the most value and return on investment are those in which the region has competitive advantages due to energy costs, raw materials or geography - such as cement, glass manufacturing, mining and agriculture. 'This is where having the local insight and presence comes in. By understanding the different markets and jurisdictions from a local perspective, we gain a better understanding of which sectors and companies will have the best potential for investment and enable us to overcome difficulties that the market may present,' a point El-Khazindar stressed and agreed to by the other panellists.

Citadel Capital is a Cairo-based private equity firm focused on acquisitions, turnarounds and greenfields in the Middle East and North Africa. Established in 2004, Citadel now controls investments worth more than $7bn in industries including mining, oil and gas, cement, transportation and food.