Capital Subsidiary Africa Railways lead investors in the Kenya and Uganda railways has completed a transaction that has seen it purchase a 34% equity stake in RVR from Safari Rail Company Limited, a wholly owned subsidiary of Nairobi-listed infrastructure company TransCentury Limited,
The transaction, which was concluded yesterday, brings Africa Railways’ total ownership of RVR to 85%, up from 51%, following the acquisition of the entire equity stake held by TransCentury Limited (“TransCentury”), a Nairobi-listed infrastructure company.
In January 2014, TransCentury, announced its subsidiary Safari Rail Company Limited (“Safari Rail”), had exercised an option that would result in a change of its shareholding in KU Railways Holdings Limited (“KURH”), this triggered a 60 day deadline under which Citadel either had to either divest its majority shareholding to TransCentury or buy it out. Citadel chose the latter option.
“We have been part of the RVR story for the past seven years and helped steer the company through some very challenging times, said Zephaniah Gitau Mbugua, the Chairperson of TransCentury Limited. RVR is vital to the economies of Kenya and Uganda and TransCentury remains fully in support of the Company. We wish Citadel Capital and the team at RVR all the best as they continue to see through the turnaround of the railway”.
Since 2010, Citadel Capital and TransCentury have led the replacement of hundreds of kilometers of decrepit track and completed the first phase of the rehabilitation of 500 kilometers of rail that links Kenya with Tororo in Eastern Uganda and Gulu in the north, ending two decades of disuse and inefficiency. The more efficient and dynamic railway is now backed by world-class technology and rehabilitated rolling stock as part of an ongoing reconditioning program. For the first time, the entire network is managed through a state-of-the-art GPS-based control room from the company’s headquarters in Nairobi; moreover, RVR is now moving into a phase that will see it purchase new locomotives, doubling its fleet size in the coming 12 months.
Commenting on the reasons why Citadel capital had and continues to invest in the Railway, Dr Ahmed Heikal the founding Chairman of Citadel Capital said “the citizens and business communities of Kenya and Uganda have a right to a world-class national railway that serves as an engine of national development and regional integration, We are honored to continue working with our partners in Africa Railways on RVR’s turnaround story,” “RVR is one of the most exciting investments in our portfolio and our most significant investment in East Africa.
Talking about the role its fellow shareholders played in turning around the business so far Karim Sadek, Citadel Capital’s Managing Director for Transportation Investments said TransCentury and Bomi have worked closely with RVR management to help the company make good on its promise to both the governments and people of Kenya and Uganda,” said “Our partnership with TransCentury has been an important part of the progress RVR has made with its turnaround to date; we are open to working closely with the team at TransCentury going forward.” Africa Railways shareholders include leading global institutions including the IFC, African Latin American and Caribbean Fund, LP (ALAC), a private equity fund managed by the IFC Asset Management Company, LLC; Dutch development bank FMO; German development finance institution DEG; FISEA, a vehicle dedicated to investment in Sub-Saharan Africa owned by France’s AgenceFrançaise de Développement and managed by its subsidiary PROPARCO; and the International Finance Corporation (IFC). Heikal concluded: “RVR will continue to provide reliable, cost-effective transportation solutions to East Africa’s emerging oil, gas and manufacturing industries, among the many other sectors driving growth in this dynamic region. We have so far only scraped the surface of what is possible.” TransCentury first invested in RVR in December 2006, acquiring a 20% stake in the company and later increased its shareholding to 34% in May 2010. Citadel Capital first acquired a minority stake in RVR in 2010, eventually becoming lead shareholder via Africa Railways.