TransCentury Limited, a Nairobi Securities Exchange listed infrastructure company, has announced the sale of its 34 per cent equity stake in the Kenya–Uganda rail concessionaire Rift Valley Railways (RVR), to Egypt’s Citadel Capital.
Citadel, a private equity firm, said it bought the shares for $37.8m (about Shs96 trillion), raising its stake to 85 per cent up from 51 per cent in Africa Railways which runs RVR together with Bomi Holdings, which owns a 15 per cent stake. Bomi Holdings is run by Ugandan business mogul Charles Mbiire. However, Mr Mbiire was not readily available to comment on the latest developments.
Citadel Capital founder and chairman Ahmed Heikal, on why the firm sought the deal in railway business, said, they are honoured to continue working with their partners in Africa Railways on RVR’s turnaround story.
The latest happenings are likely to translate more efficient development of the Kenya-Uganda railway given the reduced bureaucratic hurdle that comes as a result of TransCentury’s exit.
World-class railway services
“The citizens and business communities of Kenya and Uganda have a right to a world-class national railway that serves as an engine of national development,” Mr Heikal said, adding that RVR will continue to provide reliable, cost-effective transportation solutions to East Africa’s emerging oil, gas and manufacturing industries.
TransCentury first invested in RVR in December 2006 after acquiring a 20 per cent stake in the company and later increased its shareholding to 34 per cent in May 2010.
Earlier this year, TransCentury, announced its subsidiary Safari Rail Company Limited (Safari Rail), had exercised an option that would result in a change of its shareholding in KU Railways Holdings Limited (KURH).
This triggered a 60-day deadline under which Citadel had to either divest its majority shareholding to TransCentury or buy it out. Citadel chose the latter option.
Rift valley railways recent developments
RvR have in the last three years, completed the first phase of the rehabilitation of 500 kilometres of rail that links Kenya with Tororo in Eastern Uganda and Gulu in the north, ending two decades of neglect. The company also recently announced a move into a phase that will see it purchase new locomotives, doubling its fleet size in the coming 12 months.
Citadel’s managing director for Transportation Investments, Karim Sadek, said both TransCentury and Bomi has worked closely with RVR management to deliver on promises made to people in Uganda and Kenya.