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Aug 27 2010

Citadel completes Rift Valley Railways restructuring

Private equity firm Citadel Capital said its shareholding in the national railway of Kenya and Uganda reached 51 percent after completing a restructuring deal, according to a statement.

Through its subsidiary Ambience Ventures Ltd, Citadel now owns 51 percent of Rift Valley Railways International, which owns 100 percent of each of the Kenya and Uganda concession companies.

Citadel Capital , which has $8.3 billion in investments in the Middle East and North Africa, now has management control of RVRI, which has a 21-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 and through Kenya and Uganda, including the capital city of Kampala.

RVRI's other shareholders include Trans-Century Limited, a Kenya-based investment company (whose shareholding rose to 34 percent from 20 percent), and Bomi Holdings Ltd a Ugandan private investor (holding 15 percent).

Citadel Capital and the other RVRI shareholders are finalizing a business and investment plan that includes a $287 million capital expenditure program to rehabilitee infrastructure and rolling stock.

The firm will also work to strengthen RVRI's management team and is in advanced stages of negotiation with a leading global rail consultant to bring in international best practices, according to the statement.

Transport prices in East Africa are among the highest in the world, studies find, with transport to Uganda from Kenya presently costing more than $0.13 per ton/kilometer and a lack of operating capacity has resulted in rail capturing less than 10 percent of East Africa's transport market, the firm said.

A more "efficient rail network could, in time, bring East African transport costs down by as much as 35 percent," said Citadel Capital Managing Director Amr El-Barbary.

© Daily News Egypt 2010


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