Citadel Capital’s RFV Named Regional Infrastructure Investment Of The Year
Africa’s leading private equity firm, receives distinguished recognition from industry peers for its investment in Rift Valley Railways at Africa Investor’s (Ai) Infrastructure Investment Summit and Awards
Citadel Capital (CCAP.CA on the Egyptian Stock Exchange), the leading private equity firm in Africa and the Middle East with more than US$ 9.5 billion in investments under control, has once again been recognized for its landmark investment in Rift Valley Railways (RVR) of Kenya and Uganda. The firm’s strategic acquisition of the rail operator has been named the “Regional Infrastructure Investment of the Year” by Africa Investor (Ai), a leading international investment research and communications group.
The Ai CEO Infrastructure Investment Summit and Awards held in Johannesburg, South Africa recognized Citadel Capital’s East African railway investment as a uniquely successful example of a private sector investment in a public-private partnership (PPP) that will facilitate trade within the region.
Citadel Capital acquired a stake in RVR in February 2010 and today controls 51% the company 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.
“As Citadel Capital’s fundraising for RVR suggests, there is strong appetite from DFIs, niche investors and national banks for investing in infrastructure,” said Citadel Capital Managing Director Amr El Barbary. “We managed to close funding for a more-than US$ 300 million turnaround program for RVR despite exceptionally challenging global conditions by significantly de-risking the transaction before taking it to investors,” he added.
Commenting on the need for further cooperation between the public and private sectors, El Barbary said, “Governments looking to ‘offload’ infrastructure needs on the private sector need to choose their partners very carefully. Evaluate them on the full range of metrics — financial strength, ability to deliver management talent and proven track record. RVR would never have closed had it not been for the willingness of the governments of Kenya and Uganda to listen to what Citadel Capital and its partners were proposing.”
Prior to Citadel Capital’s investment, 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 upgrade of operational systems (2011-12), rehabilitation of existing assets (2011-13) and addition of new assets to the fleet (2012 onward).
Progress to date includes the first positive monthly EBITDA in RVR’s history, declining accident rates, declining turnaround times, new passenger routes, more frequent passenger train service, improvement in average revenue per net ton kilometer, attracting and retaining more profitable clients and drawdown on the senior debt facility.
This year, Citadel Capital’s RVR has also won the ‘Best Fundraising’ award from EMEA Finance and ‘African Infrastructure Deal of the Year’ at the Infrastructure Investor 2011 Awards. Despite an exceptionally challenging operating and fundraising environment Citadel Capital has distinguished itself as a leading investor in African infrastructure. The firm was also the recipient of EMEA Finance’s award for the Best Transport Deal in Africa 2011 for Nile Logistics, Citadel Capital’s river transport platform with operations in Egypt and Sudan.
