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Business

Troubled RVR still attractive to investors, gets new shareholder

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Citadel Capital holds a 51 per cent stake in Rift Valley Railways (RVR) through one of its platform firm, Africa Railways, which invests in Africa’s rail industry. Photo/File

Emerging Capital Partners has reached an agreement with Qalaa Holdings to acquire the latter’s 73.76pc stake in Rift Valley Railways. PHOTO|FILE 

By NJIRAINI MUCHIRA

Posted  Tuesday, April 4   2017 at  16:51

In Summary

  • This is the fifth time that RVR, the concession operator of the Kenya-Uganda railway line, is changing hands in a period of 12 years.
  • ECP edged out other international companies that Qalaa has been in negotiations with regarding disposal of its stake in RVR after the concession became a liability.
  • Other companies that were interested were project management firm Armstrong & Duncan, petroleum distributor Rubix Energy, logistics firm Shreeji Enterprises and state-owned South African railway firm Transnet Engineering.

A pan-African private equity firm will be the new principal shareholder of the troubled Rift Valley Railways.

The EastAfrican can report that Washington-based Emerging Capital Partners (ECP), which says it invests in companies that operate in business environments characterised by limited competition, has reached an agreement with Cairo-based Qalaa Holdings to acquire the latter’s 73.76 per cent stake in RVR.

This is the fifth time that RVR, the concession operator of the Kenya-Uganda railway line, is changing hands in a period of 12 years. The concession has a lifespan of 25 years.

ECP edged out other international companies that Qalaa has been in negotiations with regarding disposal of its stake in RVR after the concession became a liability.

Other companies that were interested were project management firm Armstrong & Duncan, petroleum distributor Rubix Energy, logistics firm Shreeji Enterprises and state-owned South African railway firm Transnet Engineering.

ECP, which has raised over $2 billion for investments, is not new in Kenya.

It is in the process of raking in a whopping $100 million from the sale of Kenyan coffee chain Java House after controlling the business for only five years.

The PE firm acquired a 90 per cent stake in Java House in 2012 and is currently in talks with two American firms interested in buying it out.

The firm will make impressive profits from the deal having reportedly paid between $25 million and $60 million for the business.

ECP also has interests in Wananchi Group, the media and telecommunications company specialising in pay television, satellite and Internet services.

According to multiple sources, ECP has already agreed in principle to acquire RVR and has contracted audit and advisory firm KPMG to carry out due diligence on the firm, a process that has been ongoing over the past few weeks.

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