RVR back on track

Two key investors in the Kenya and Uganda railways will inject $250 million (Sh19 billion) to restructure Rift Valley Railways, it emerged on Tuesday, as the company that won the concession to run the two rail operations appeared to roll back on track.

Trans-Century Ltd and Ambience Ventures Ltd, a subsidiary of Citadel Capital, the Egyptian private equity firm that recently acquired 35 per cent stake in Sheltam, the lead investor in RVR, are expected to conclude the deal in mid April.

This will change the shareholding structure of Rift Valley Railways with Ambience Ventures Ltd taking up 51 per cent to become the majority shareholder while Trans-Century, a local investment company, will expand its stake from 20 per cent to 34 per cent.

An unnamed Ugandan investor will hold 15 per cent.

The two investors have been feuding over the legality of Citadel’s entry, and Trans-Century and other investors had filed a case in Mauritius contesting it.

This forced IFC, one of the key financiers, to arbitrate a truce.

It was not immediately clear whether it will withdraw the case, scheduled for hearing next Wednesday.

“Both companies appreciate the importance of Kenya’s and Uganda’s national railway and are committed to executing a successful turn-around of Rift Valley Railways,” Trans-Century and Ambience said in a joint statement released in Nairobi on Tuesday.

Ambience Ventures Ltd holds a 49 per cent stake in Sheltam Railways, the largest single shareholder in RVR, giving it an effective 17.5 per cent stake in RVR.

Ambience has $ 8.3 billion in investments under its control with investments in Africa and Middle East.

Kenya and Uganda awarded RVR consortium a 25-year concession to run the 2,000-kilometre railway line but have been largely been disappointed after failure to improve the services due to financing issues.

The two companies said they would inject capital to fund investment, development a sustainable business and investment plan.

This will include a capital expenditure outlay of $250 million to rehabilitate the infrastructure and rolling stock.

They said they will also strengthen of the company’s management and provide the needed technical expertise.

The companies lead negotiations between Kenya and Uganda to revitalise the concession and facilitate the development of the standard gauge railway.

“Both Trans-Century and Citadel Capital realise that the joint railways concession is critical for the economic development of the region and have agreed to a negotiated solution to help fast-track the turnaround of Rift Valley Railways for the benefit of the peoples of Kenya and Uganda,” they said.