One of Egypt's largest investment companies Qalaa Holdings, formerly Citadel Capital, announced Sunday that its Board of Directors approved the company's capital increase worth 1.7 billion Egyptian pounds (US$222.7 million). The Board of Directors approved the submission to the Egyptian Exchange of a Form 48 request for authorization to call an Extraordinary General Meeting of shareholders. The EGM would seek approval to increase the company's current paid-in-capital by EGP 1.7 billion to EGP 9.7 billion from EGP 8 billion. The proposed capital increase will be primarily funded through the capitalization of liabilities arising from the purchase of additional shares in core subsidiaries, particularly in energy and cement, from limited partners and co-investors. It comes as Qalaa finalizes its transformation into a holding company with majority stakes in its core infrastructure and industrial investments. In this respect, this capital increase is a smaller, second and final version of the capital increase that Qalaa executed in 2014, which saw paid-in capital rise by EGP 3.64 billion to EGP 8 billion. From his part, Ahmed Heikal - Chairman and Founder of Qalaa Holdings – said: "With Egypt now on track for an economic recovery, the time is right to complete our transformation through the acquisition of additional stakes in the subsidiaries and business units that are best positioned to benefit from the upturn," "Further increasing Qalaa's ownership in its core subsidiaries at attractive valuations will allow us to maximize earnings over the medium and long term," said Qalaa Co-Founder and Managing Director Hisham El-Khazindar. "Meanwhile, on the divestiture front, we are pushing forward with the disposal of selected assets. Liquidity generated from exits of these investments at the right time and right valuations will allow us to accelerate our deleveraging and derisking and will further strengthen Qalaa's financial position." The proposed increase will see Qalaa Holdings issue up to an additional 340 million shares, of which 255 million would be common shares and 85 million preferred shares, bringing the total number of outstanding shares to 1.94 billion, of which 1.455 billion would be common and 485 million preferred. Concluded Heikal: "This will hasten our return to profitability during 2015, one year earlier than originally anticipated, and will open the way for dividend distribution in the coming years." Management expects the proposed transaction will be the last such capital increase by synthetic swap of the transformation process.
