Fundraising

Citadel ups stake in African railway

A subsidiary of Egyptian investment firm Citadel Capital has paid $37.8m to increase its holding in Rift Valley Railways from 51% to 85%.

-

Africa Railways, a subsidiary of Egyptian investment firm Citadel Capital, has paid $37.8 million to acquire an additional 34 percent interest in Rift Valley Railways (RVR) from TransCentury, a Nairobi-listed infrastructure firm. RVR runs extensive railway lines between Kenya and Uganda.

On top of the 51 percent already owned by Africa Railways, the latest deal takes its shareholding to 85 percent. The deal, worth a total $80 million, also includes a $42.2 million capital injection into RVR to support its ongoing five-year turnaround programme.

Citadel first acquired a minority stake in RVR in 2010 and eventually became the lead shareholder via Africa Railways. It has since led the creation and financing of a five-year, $287 million turnaround programme for what was an ailing railway at risk of defaulting on concession agreements with the Kenyan and Ugandan governments.

Africa Railways shareholders include: the International Finance Corporation (IFC) African, Latin American and Caribbean Fund; LP (ALAC), a private equity fund managed by the IFC Asset Management Company; Dutch development bank FMO; German development finance institution DEG; FISEA, a Sub-Saharan Africa-focused fund managed by France’s PROPARCO; and the IFC.

In a statement, Citadel chairman and founder Ahmed Heikal said hundreds of kilometres of decrepit track had been replaced, 500 kilometres of track rehabilitated and a state-of-the-art control room installed at the company’s headquarters in Nairobi. The firm is now set to buy new locomotives to double its fleet size in the next year.

“With the backing of leading development finance institutions and specialist investors, we have invested more in RVR in the past two years than was invested in the previous 25,” said Heikal.

Citadel, which is listed on the Egyptian Stock Exchange, has $9.5 billion in investments under management and focuses on five core industries: energy, transportation, agrifoods, mining and cement. In 2012, the firm began shifting its model away from shorter-term private equity investments towards longer-term investments in infrastructure and resources.