Global Institutions Agree to US$ 164 mn Financing Package for Rift Valley Railways, a Portfolio Company of Citadel Capital’s Railways Platform

Rift Valley Railways of Kenya and Uganda, a subsidiary of Citadel Capital Platform Company Africa Railways, wins financing from six leading global development finance institutions and a leading Kenyan bank for a five-year capital expenditure program to rehabilitate infrastructure and rolling stock

Africa Railways, a Platform Company of leading Middle East and Africa private equity firm Citadel Capital, announced today that its Portfolio Company Rift Valley Railways (RVR) has concluded a US$ 164 million financing package for an ambitious five-year capital expenditure program.

Six leading global development finance institutions (DFIs) and one local bank are participating in the package, which backs a US$ 287 million capex program to accelerate the pace at which RVR will rehabilitate its infrastructure and rolling stock.

“Citadel Capital has a proven track record not just of structuring compelling investment opportunities in very interesting sectors of the African economy, but also of sourcing financing from highly sophisticated global partners,” said Ahmed Heikal, Chairman and Founder of Citadel Capital, the lead shareholder in RVR, which with limited partners in its funds owns c.51% of Rift Valley Railways through its Platform Company Africa Railways.

In a joint statement, the Ministers from Kenya and Uganda commented, “The two Governments are happy to report that RVR has shown commitment in meeting its obligations and improving rail services in the two countries. RVR has presented several investment plans for track maintenance, rehabilitation of locomotives and wagons for consideration by the Governments of Kenya and Uganda. It is expected that following the signing of the loan agreements between RVR and the lenders, finances will be released expeditiously for the implementation of these plans.”

Institutions participating in the package include:
• African Development Bank (AfDB, with US$ 40 million)
• International Finance Corporation (IFC, US$ 22 million)
• KfW Entwicklungsbank (The German Development Bank) (KfW, US$ 32 million)
• FMO (the Dutch development bank, US$ 20 million)
• Kenya’s Equity Bank (US$ 20 million)
• The ICF Debt Pool (US$ 20 million)
• Belgian Investment Company for Developing Countries (BIO, US$ 10 million)

Shareholders will inject a further US$ 82 million in equity to back the capex program with the balance of the funding being contributed by free cash flow.

“This financing package is the backbone of an ambitious five-year, multi-point rehabilitation program that will see RVR make a quantum leap in operating standards as it addresses safety issues, completes back-due maintenance to improve reliability and hauling capacity, simultaneously improves service to passengers and corporations, and captures long-term gains through substantial investments in information technology,” added Karim Sadek, Managing Director at Citadel Capital, Africa’s largest private equity firm with US$ 8.7 billion in investments under control spanning 15 industries across a 14-country footprint.

The announcement comes one week after RVR reported its first monthly positive EBITDA in June 2011 — nearly US$ 0.7 million — the first month it has reported a positive operational cash flow since Citadel Capital invested and the company’s largest monthly EBITDA figure since its founding.

“Our rehabilitation program, which we kickstarted in November 2010, has already delivered impressive early results,” said Brown Ondego, Group Chief Executive Officer of RVR. “Net ton kilometers were up 9% 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% in the same period. Year-on-year, we have also seen a 30% drop in accidents per train kilometer.”

The faster turnaround times have also helped RVR to increase its volume of cargo by 8% in each of the past two quarters. Expanded passenger services and better synchronization between passenger and freight schedules has seen the daily frequency of passenger trains rise to 14 from eight services per day as well as the introduction of a new route from Nairobi CBD to Athi River, which includes a stop at Kitengela.

African Development Bank President Donald Kaberuka noted, “The Rift Valley Railways project fits well with the African Development Bank’s overarching focus on infrastructure development, especially with private participation efforts to facilitate regional integration and access to land-locked countries. Improving the Kenya-Uganda railway network will give a strong boost to regional trade, which is one of the key priority areas in the bank’s regional integration strategy.”

“IFC, a member of the World Bank Group, has provided leadership and dedicated significant financial and technical resources to the entire turnaround process for Kenya-Uganda Rail,” said Jean Philippe Prosper, IFC Director for East Africa. “We are committed to the success of this key railway project, which is part of a broader IFC effort to encourage private investment in infrastructure and promote social and economic development in Kenya, Uganda, and the surrounding region.”

“This is a landmark deal for East Africa which will improve the interconnection between the urban centers of Kampala and Nairobi and the region’s biggest port in Mombasa in an environmentally friendly manner. It will boost economic development in the whole region and contribute significantly to the well-being of the people in Uganda and Kenya,” says Klaus Müller, KfW Entwicklungsbank, Director Eastern and Western Africa.

“FMO strongly believes in the rehabilitation and upgrading of this historic railway, which will boost economic and social development in Kenya, Uganda and beyond,” said Jaap Reinking, Director Global Partners of FMO. “We are pleased to be part of this important project, which fits well within FMO’s mission of supporting private sector in developing markets.”

Hugo Bosmans, CEO of BIO, said, “This is the first BIO investment in the rail transport sector in Africa. RVR meets perfectly our target of providing the most adequate balance between economic efficiency and development impact.”

Transport prices in East Africa are among the highest in the world, studies find, with transport to Uganda from Kenya sometimes costing more than US$ 0.13 per ton/kilometer (the standard industry metric) due in large part to heavy reliance on trucking. A lack of operating capacity has resulted in rail capturing less than 10% of East Africa’s transport market.

An efficient rail network could, in time, bring East African transport costs down by as much as 35% due to the operational and fuel efficiency of shipping by rail. In its last full year of operations ending June 2010 RVR hauled approximately 1.5 million out of an existing market of 16 million tons being handled in Mombasa Port. The goal is to see that figure grow to 5 million tons per year by 2015.

RVR has 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 to the interiors of Kenya and Uganda, including the capital city of Kampala.


Rift Valley Railways (RVR) is the Kenya-Uganda concessionaire operating freight and passenger rail services in Kenya and Uganda on an exclusive basis. The company was founded in 2006 and has been granted a 25-year mandate to operate railway services on 2,000 kilometers of track linking the Indian Ocean port of Mombasa in Kenya with the interiors of both Kenya and Uganda, including Kampala. RVR is owned by the following shareholders: Citadel Capital and limited partners in its funds (51%); TransCentury through 100% owned subsidiary Safari Rail Limited (34%) and Bomi Holdings (15%).

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 US$ 8.7 billion in 14 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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