Citadel Capital, Egypt's largest buyout firm, reported losses of US$4.2 million (Dh15.4m) in the second quarter as income dried up and investment activity stagnated following the country's revolution.
The loss compares with a profit of $50,000 during the same period last year, the firm said yesterday. "The macro picture in Egypt is today essentially as we had forecast: We see ongoing macroeconomic challenges continuing to prompt foreign investors to sit on the sidelines waiting for visibility, a reality we expect will continue to play out over the coming 12 to 18 months," said Ahmed Heikal, the chairman and founder of Citadel.
Citadel had been focusing on helping companies it owns to cope with political change in Egypt, he said.
While many observers expect Egypt's economy to enjoy a resurgence if its new leadership adopts prudent economic policies, economic growth has already been hit hard by the turmoil that started with the ousting of Hosni Mubarak as president early this year. The IMF estimates the country's GDP will grow just 1.2 per cent this year, a sharp fall from growth of almost 5 per cent in previous years.
"Since the revolution, we have engaged in housecleaning and ensured that our investments are in the best positions possible to weather the economic fallout from political changes that we are convinced will be positive for business in the long run," Mr Heikal said.
With investments in exporters and in agriculture, mining, oil and gas, he said, along with a portfolio of holdings outside Egypt, "we are not fighting the currents, but sailing with them".
Ahmed Badreldin, a senior partner at Abraaj Capital in Dubai who oversees the private equity giant's investments in Egypt, said at a recent conference that the argument for the country was still intact: it has a young and growing population - at 80 million, the largest in the Arab world - coupled with low-cost labour and close trade ties with Europe.
"We are in a transition currently in Egypt, but we just don't know in a transition to what," he said.