Citadel Capital, a leading private equity firm in Africa and the Middle East, with investments totalling $US8.3 billion, confirmed on 22 February that it has acquired a 49% stake in the Sheltam company, the largest single shareholder and lead investor in the Rift Valley Railways (RVR) consortium.
Sheltam, a South African company, owns 35% of RVR, holder of a 25-year concession to operate the railway linking Kenya’s Indian Ocean port of Mombasa with the rest of the country as well as Uganda and its capital, Kampala. Effectively, Citadel Capital now holds 17.5% of RVR. “We will look to inject more than $150m in the railway over the coming five years,” managing director Karim Sadek says.
“The first of several investments we are exploring in East Africa, it is a natural extension of our interest in African transport and logistics.
“The Kenya-Uganda Railway has immense potential waiting to be unlocked through the appropriate deployment of capital and management talent,” Sadekexplains. “We intend to acquire 100% of Sheltam, and to pursue other investments in Africa’s promising transport sector.” Transport in East Africa is among the costliest the world, that between Mombasa and Kampala running at more than $0.13 per ton/km. A lack of operating capacity has resulted in rail capturing less than 10% of the region’s transport market.
“An efficient rail network could, in time, bring East African transport costs down by as much as 50% due to the inherent operational and fuel efficiency of shipping by rail,” Citadel Capital’s managing director Amr El-Barbary says, pointing out that the railway currently hauls just over 1mta of the 16mta being handled in the port of Mombasa. “New investment and a fresh approach to management could see that figure grow to 5mta within five years.”
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Original article [Railways Africa]