Citadel Capital Acquires Stake in Kenya & Uganda’s Rift Valley Railway

Citadel Capital has acquired a stake in a storied Kenya-Uganda railway as it begins deploying US$ 200-400 million in East Africa in 2010-12

Citadel Capital (CCAP.CA on the Egyptian Stock Exchange), the leading private equity firm in Africa and the Middle East with US$ 8.3 billion in investments under control, confirmed today that has acquired a 49% stake in Sheltam Railways Company, the largest single shareholder and lead investor in Rift Valley Railways of Kenya and Uganda.

Sheltam owns 35% of Rift Valley Railways (RVR), which has a 25-year concession to operate a century-old rail line with some 2,000 kilometers of track linking the Indian Ocean port of Mombasa in Kenya with the interiors of both Kenya and Uganda, including the capital city of Kampla. The transaction gives Citadel Capital an effective ownership of 17.5% of RVR.

“Citadel Capital will look to inject more than US$ 150 million in Kenya Uganda Railways over the coming five years,” said Citadel Capital Managing Director Karim Sadek. “This is the first of several investments we are exploring in East Africa and is a natural extension of our proven interest in the continent’s transportation and logistics sector.”

“Kenya Uganda Railways is a storied line with immense potential waiting to be unlocked by the smart deployment of capital and management talent, two things Citadel Capital would bring to the table,” added Sadek. “Going forward, it is our intention to acquire 100% of Sheltam at the same time as we continue exploring other investments in Africa’s promising transport sector.”

Across its core African footprint, Citadel Capital sees transport costs being a major impediment to economic growth: High costs and systemic inefficiency greatly reduce the competitiveness of African businesses, as East African Community reports clearly underline.

Transport prices in East Africa are among the highest in the world, studies find, with transport to Uganda from Kenya presently costing more than US$ 0.13 per ton/kilometer (the standard industry metric) due in large part to heavy reliance on trucking. A lack of operating capacity has resulted in rail capturing less than 10% of East Africa’s transport market.

“An efficient rail network could, in time, bring East African transport costs down by as 50% due to the operational and fuel efficiency of shipping by rail,” said Citadel Capital Managing Director Amr El-Barbary, noting that, “Kenya Uganda Railways hauls just over 1 million tons per annum today out of an existing market of 16 million tons being handled in Mombasa Port today. New investment and a fresh approach to management could see that figure grow to 5 million tons per annum within five years.”

Citadel Capital has a proven track record of working hand-in-hand with existing management teams to recruit globally experienced consultants and additional management talent at all of its platform investments. Citadel Capital fully supports Rift Valley Railways in its ongoing discussions with América Latina Logística (ALL) on the finalization of a technical agreement, noting that ALL’s capacity and expertise complement Citadel Capital’s know-how.

Citadel Capital’s other investments in Africa’s transportation and logistics sector include Egypt’s National River Transportation Company and Sudan’s Keer Marine. Both companies operate environmentally friendly, fuel-efficient river transport networks and are developing supporting river ports / logistics hubs.

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Citadel Capital (CCAP.CA on the Egyptian Stock Exchange) is the leading private equity firm focusing on building regional platform investments throughout Africa and the Middle East in select industries through acquisitions, turnarounds, and greenfields executed via Opportunity Specific Funds. Citadel Capital’s 18 OSFs now control Platform Companies with investments worth more than US$ 8.3 billion in 14 countries spanning 15 industries, including mining, cement, transportation, food and energy. Since 2004, the firm has generated more than US$ 2.4 billion in cash returns to its co-investors and shareholders, more than any other private equity firm in the region. Citadel Capital is the largest private equity firm in Africa by PE assets under management (2004-2009, as ranked by Private Equity International). For more information, please visit www.citadelcapital.com.

For more information, please contact:

Ms. Ghada Hammouda
Head of Corporate Communications,
Citadel Capital (S.A.E.)

g...@qalaaholdings.com (click to reveal this email)

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