Press Releases: Citadel Capital Wins Industry Awards for Rift Valley Railways Investment
Monday, 23 April 2012
The leading private equity firm in Africa and the Middle East was recognised with several awards for outstanding work on Rift Valley Railways that includes innovative fundraising in excess of USD300m and the implementation of a rehabilitation programme to turn the once ailing railroad into one of the most efficient providers of long-haul bulk transport in Africa. |
Citadel Capital (CCAP.CA on the Egyptian Stock Exchange), a leading private equity firm in Africa and the Middle East with more than USD9bn 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 recognised 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 2,352km 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 USD234m to back the USD287m capital expenditure programme for RVR, including USD70m in fresh equity for Africa Railways Ltd (which will fund RVR) and USD164m in senior debt.
Institutions participating in the debt package and the capital increase include: African Development Bank (AfDB), International Finance Corporation (IFC), German development bank KfW, Dutch development bank FMO, 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 Ugandan Bomi Holdings, to formulate a three-point turnaround programme with investments of USD287m. The pillars of the programme include the upgrade of operational systems (2011-12), rehabilitation of existing assets (2011-2013), and addition of new assets to the fleet (2012 onward).