Before 2012, Emerging Capital Partners could easily have passed as any other private equity firm seeking medium deals in Africa that guarantee returns on investments.

But the acquisition of the Nairobi Java House in a deal believed to have been worth between $25 million and $60 million changed that.

Before the Java House investment, which coincided with the opening of a regional office in Nairobi, ECP had only invested in Wananchi Group in East Africa in a deal worth $25 million.

But the revelations that ECP has beaten out big companies, some with political connections, to acquire a controlling stake in Rift Valley Railways (RVR), shows the PE is now ready to expand its footprint in Africa.

This is the first time ECP is investing in the transport sector, having mainly focused on financial services, telecommunications, retail and consumer, natural resources, agriculture and infrastructure.

Unlike its current portfolio of 18 companies in Africa, RVR represents a risky venture that seems to burn the fingers of every past owner apart from the original winner of the 25-year concession Roy Puffet, the proprietor of Sheltam Railways.

Qalaa Holdings, which has been the RVR main shareholder for only two years, is walking way after terming RVR as “liabilities held for sale.”

According to analysts, ECP’s decision to acquire RVR must have been informed by the belief that it holds a better chance to make the Kenya-Uganda concession successful even after its predecessors failed miserably.

“Any investor interested in RVR must view the business as viable, one that only needs the right strategies to make it worthwhile,” said Eric Musau, senior research analyst at Standard Investment Bank.
He added that the investors must have critically analysed the remaining term of the concession and the capital expenditure required to turn around the business and come up with a different strategy that they believe will make RVR deliver returns.