The Essential Ingredients for Successful Infrastructure Investing in Africa

Citadel Capital Managing Director Stephen Murphy says infrastructure investments are a key driver for growth in Africa

Africa is short of capital, short of experienced general partners, and long on compelling investment opportunities, a senior industry figure told participants at Mergermarket’s “Africa M&A and Private Equity Forum 2011” yesterday in London.

In remarks anchoring a panel titled “Infrastructure: A key deal driver for Africa?”, Citadel Capital Managing Director Stephen Murphy used the example of Citadel Capital’s investment in Rift Valley Railways, which has a 25-year concession to operate 2,352 km of track linking the Indian Ocean port of Mombassa to the interiors of Kenya and Uganda, including the Ugandan capital Kampala.

In recent weeks, the Firm has announced that it has secured a total of US$ 234 million in new debt and equity to fund a five-year investment program to rehabilitate this neglected but economically vital transportation artery.

“The key ingredients for RVR are a) an economically compelling investment opportunity; b) an experienced and successful management team; c) value-added local and regional sponsors; d) a well structured concession agreement which aligns the interests of the Kenyan and Ugandan governments with those of the sponsors and investors; and, e) the availability of reasonably priced long-term debt capital.”

International institutions participating in the US$ 164 million senior debt package included the African Development Bank, IFC, Germany’s KfW, FMO, the ICF Debt Pool, BIO and Kenya’s Equity Bank. Meanwhile, IFC, FMO, DEG, and PROPARCO all subscribed to Africa Railways Ltd.’s US$ 70 million capital increase.

“The participants in the Debt and Equity financing for this turnaround investment program are the most experienced investors in Africa. We have worked very hard alongside RVR CEO Brown Ondego since we first got involved with Rift Valley Rail in late 2009. It has taken over 18 months to de-risk this investment,” Murphy said. “Today, the senior management team is complete, problems with the initial concession agreement have been ironed out with the Kenyan and Ugandan governments and are behind us, our technical partner América Latina Logística is implementing the operational turn-around plan.”

“The risk reduction through what PROPARCO called the mix of ‘financial, strategic and technical expertise’ we brought to this transaction was the key to securing substantial new investment,” Murphy concluded. “It is why institutions such as Germany’s DEG noted that they were ‘once more very impressed by Citadel Capital’s ability to execute large and very complex transactions in Africa’.”


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 creating 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 US$ 8.7 billion in 15 countries spanning 15 industries, including mining, cement, transportation, food and energy. Since 2004, Citadel Capital has generated more than US$ 2.2 billion in cash returns to its co-investors and shareholders (on investments of US$ 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

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Ms. Ghada Hammouda
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Citadel Capital (S.A.E.) (click to reveal this email)

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