Citadel Capital Wins Series of Prestigious Industry Awards for Groundbreaking Achievements on Rift Valley Railways
The leading private equity firm in Africa and the Middle East is recognized with back-to-back awards for outstanding work on Rift Valley Railways that includes innovative fundraising in excess of US$ 300 million and the implementation of a rehabilitation program that will see the once ailing railroad become one of the most efficient providers of long-haul bulk transport in Africa
Citadel Capital (CCAP.CA on the Egyptian Stock Exchange), the leading private equity firm in Africa and the Middle East with more than US$ 9 billion in investments under control has been named “Private Equity Firm of the Year” and given the “Best Fundraising” award for Rift Valley Railways (RVR) by Emea Finance, the emerging Europe, Middle East and Africa finance magazine.
The firm, which has investments in 15 countries spanning 15 industries, also won “African Infrastructure Deal of the Year” for RVR at the Infrastructure Investor 2011 Awards.
“We are extremely proud to be recognized as a leading investor in African infrastructure,” said Citadel Capital Managing Director, Karim Sadek. “All three awards underscore the compelling fundamentals of Rift Valley Railways and are a ringing endorsement of a proven methodology that has allowed us to structure large, complex deals by addressing financing, political and execution risk thereby creating opportunities that are both attractive and accessible to global investors.”
Citadel Capital acquired a stake in RVR of Kenya and Uganda in February 2010 and today controls 51% of the rail operator through Africa Railways, the firm’s Platform for investment in Africa’s rail industry. RVR owns a 25-year concession to operate a century-old rail line with some 2,352 kilometers of track linking the Indian Ocean port of Mombasa in Kenya with the interiors of both Kenya and Uganda, including the Ugandan capital, Kampala.
By structuring a transaction that is compelling to international institutional investors and by de-risking it prior to selling them on it, Citadel Capital managed to attract development finance institutions and sophisticated international investors who helped the firm raise a total of US$ 234 million to back the US$ 287 million capital expenditure program for RVR, including US$ 70 million in fresh equity for Africa Railways Ltd (which will fund RVR) and US$ 164 million in senior debt.
Institutions participating in the debt package and the capital increase include: African Development Bank (AfDB), International Finance Corporation (IFC), KfW Entwicklungsbank (The German Development Bank), FMO (the Dutch development bank), Kenya’s Equity Bank, the ICF Debt Pool, Belgian Investment Company for Developing Countries (BIO), IFC African Latin American and Caribbean Fund, DEG and France’s PROPARCO.
“The decision to invest in RVR was underpinned by the strong freight volumes moving through the Port of Mombasa, the East African Community’s drive toward economic integration, and the simple fact that in a fully rehabilitated state RVR should be the most efficient provider of long-haul bulk transport,” said Sadek. We also saw that RVR could be rehabilitated faster and at a small fraction of the cost of building a greenfield railway,” said Sadek.
Prior to Citadel Capital’s investment in early 2010, RVR was a loss-making operation with aging and poorly maintained infrastructure and rolling stock. The lack of funding caused further problems including shareholder disputes and an inability to meet the conditions precedent to draw on additional debt and secure a qualified technical partner.
For the past two years, Citadel Capital has been working with the RVR management and its local partners (Transcentury and Bomi Holdings), to formulate a three-point turnaround program with investments of US$ 287 million. The pillars of the program include the upgrade of operational systems (2011-12), rehabilitation of existing assets (2011-2013), and addition of new assets to the fleet (2012 onward).
Despite the challenging operating environment Citadel Capital has managed to outperform the market with a string of back-to-back awards for its African investments. Citadel Capital is also the recipient of Emea Finance’s award for the Best Transport Deal in Africa 2011 for Nile Logistics, the firm’s river transport Platform with operations in Egypt and Sudan.