Nairobi, Kenya, August 2, 2011—IFC,
a member of the World Bank Group, along with six leading international
finance institutions today extended $164 million in financing to Rift Valley
Railways International (RVRI) to rehabilitate the Kenya-Uganda railway,
a vital transport network for East Africa whose rehabilitation will encourage
cross-border trade and investment.
The package backs a $287 million capital expenditure program to improve
the operating company’s infrastructure and rolling stock. IFC becomes
the largest financier to Rift Valley Railways, providing $42 million –
a loan of $32 million loan, of which $10 million is already disbursed,
and an additional $10 million in equity to be committed.
RVRI is a portfolio company of Citadel Capital, an Egypt-based private
equity firm with $8.7 billion in investments across 14 countries in Africa.
The Kenya-Uganda railway line has a track length of 2,350 kilometers, and
employs 219 locomotives and 7,500 railroad cars. Other key shareholders
are TransCentury and Bomi, which are Kenyan and Ugandan companies, respectively.
“This financing package is the backbone for an ambitious five-year rehabilitation
program that will see Rift Valley Railways International make a quantum
leap in operating standards as it addresses safety issues, completes due
maintenance to improve reliability and hauling capacity, improves service
to passengers, and captures long-term gains through investments in information
technology,” said Karim Sadek, Managing Director at Citadel Capital.
IFC has played a critical role in encouraging private investment in the
Kenya-Uganda railway since the inception of the project in 2005. Following
the departure of the project’s initial sponsor, IFC led the restructuring
of the shareholder group that resulted in the entry of new project sponsors
“Our rehabilitation program has already delivered impressive early results,”
said Brown Ondego, Group Chief Executive Officer of RVRI. “Net ton kilometers
were up 9 percent in the first half of 2011, compared with the same period
last year, while turnaround times — a key measure of asset utilization
— on the strategic Mombasa-Kampala route dropped 27 percent in the same
period. Year on year, we have also seen a 30 percent drop in accidents
per train kilometer.”
Other institutions participating in the package include: African Development
Bank ($40 million); Germany’s KfW Bankengruppe ($32 million); Dutch Development
Bank FMO ($20 million); Kenya’s Equity Bank ($20 million); Cordiant’s
Infrastructure Crisis Fund ($20 million); and the Belgian Investment Company
for Developing Countries ($10 million). The balance of the funding for
the $287 million capital expenditure program is being contributed by shareholders
and generated through operations.
“IFC has provided leadership and dedicated significant resources to encourage
the turnaround of the Kenya-Uganda rail project,” said Jean Philippe Prosper,
IFC Director for East Africa. “We are committed to the success of this
railway as part of a broader effort to encourage private investment in
infrastructure that promotes regional integration and social and economic
development in Kenya, Uganda, and the surrounding region.”
Transport prices in East Africa are among the highest in the world, largely
due to heavy reliance on trucking. A lack of operating capacity has resulted
in rail capturing less than 10 percent of East Africa’s transport market.
An efficient rail network has the capacity to reduce East African transport
costs by as much as a third due to the operational and fuel efficiency
of rail shipment.
IFC, a member of the World Bank Group, is the largest global development
institution focused exclusively on the private sector. We help developing
countries achieve sustainable growth by financing investment, providing
advisory services to businesses and governments, and mobilizing capital
in the international financial markets. In fiscal year 2011, amid economic
uncertainty across the globe, we helped our clients create jobs, strengthen
environmental performance, and contribute to their local communities—all
while driving our investments to an all-time high of nearly $19 billion.
For more information, visit www.ifc.org
About Citadel Capital
Citadel Capital (CCAP.CA on the Egyptian Stock Exchange) is the leading
private equity firm in the Middle East and Africa. Citadel Capital focuses
on building regional platforms in select industries through acquisitions,
turnarounds, and greenfields executed via Opportunity-Specific Funds. The
firm’s 19 OSFs now control Platform Companies with investments worth more
than $8.7 billion in 14 countries spanning 15 industries, including mining,
cement, transportation, food and energy. Since 2004, Citadel Capital has
generated more than $2.2 billion in cash returns to its co-investors and
shareholders (on investments of $650 million), 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 (2006-2011, as ranked by Private
Equity International). For more information, please visit www.citadelcapital.com.