Citadel-backed East African rail operator receives $164m

Rift Valley Railways, which operates rail lines in Kenya and Uganda, has received a financing package from the African Development Bank, the International Finance Corporation, Kenya’s Equity Bank and others. The financing forms part of a $287m capital expenditure programme.

An East African railway operator co-owned by Cairo-based private equity firm Citadel Capital has received a financing package of $164 million from institutions including the International Finance Corporation and the African Development Bank.

Rift Valley Railways (RVR) has a 25-year concession to operate  over 2,300 kilometres of track in Kenya and Uganda, including lines running to Mombasa and Kampala, according to a statement. Citadel owns 51 percent of the company and Kenyan investor TransCentury owns 34 percent. Ugandan company Bomi Holdings also owns an interest in RVR.

The African Development Bank has agreed to provide the largest single share of the financing package with $40 million, according to a statement. The International Finance Corporation (IFC), the private sector investment arm of the World Bank, will provide $22 million, while Dutch development bank FMO, Kenya’ s Equity Bank, and the ICF Debt Pool will provide $20 million each. 

German development bank KfW Entwicklungsbank has agreed to loan $32 million, and the Belgian Investment Company for Developing Countries will contribute $10 million.

The IFC is also considering an additional $15 million equity commitment to RVR, according to a project page on the IFC website. The IFC also disbursed a loan of $10 million to RVR in 2008.

The financing package is part of a $287 million, five-year capital expenditure programme to upgrade RVR’s infrastructure and rolling stock. Shareholders will contribute $82 million in equity to back the capital expenditure programme, according to a statement.

Jean Philippe Prosper, IFC director for East Africa, said in a statement that the financing represented part of “a broader effort to encourage private investment in infrastructure that promotes regional integration and social and economic development in Kenya, Uganda, and the surrounding region”.

Last month, Citadel announced that RVR had recorded $674,000 in earnings before interest, taxes, depreciation and amortisiation (EBITDA) for the month of June 2011, marking the first positive EBITDA since Citadel bought an indirect stake in the company in December 2009.

In a statement, Citadel managing director Karim Sadek said the financing package would be the “backbone” of a rehabilitation programme that would enable RVR to make “a quantum leap in operating standards”.

Citadel, which manages assets of $8.7 billion, has also invested in businesses including transportation and port management company Nile Logistics and upstream oil and gas exploration business National Petroleum Company, according to the firm's website.