Qalaa Holdings in negotiations for the sale of its stake in Rift Valley Railways

By Silvia Nyambura

Egyptian firm Qalaa Holdings has confirmed that preliminary negotiations are ongoing with several prospective local and international investors for the sale of its stake in Rift Valley Railways (RVR), the national railway of Kenya and Uganda. No official agreement or offer has been reached yet, and Qalaa will continue to communicate further information in due course as negotiations advance.

The decision to divest from RVR comes in the wake of management’s conclusion that additional capital is required to complete the company’s transformation program, which has already yielded positive results on RVR’s operational performance. Qalaa holds an indirect stake of 73.76 % in RVR but its total direct and indirect interest including stakes held by several of its partners stand at 85%.

In a statement, the company explained the US$ 320 million fresh capital injected into the 1,200km railway in five years from 2010 has not raked in profits.

Qalaa, formerly Citadel, became the majority shareholder with a 51% stake in the RVR consortium in March 2010 after acquiring a 35% stake held by South Africa’s Sheltam Railway through Africa Railways Ltd – its investment vehicle. Sheltam was the lead investor at the time the RVR consortium won the 25-year concession to operate the railway in November 2006, including five years for passenger-rail services which was renewed on expiry.

The shareholding by the Egyptian firm rose to 85% after it bought an additional 34% from Kenya’s TransCentury at US$ 43.7 million.

Uganda’s Bomi Holdings, owned by local businessman Charles Mbire controls the remaining 15% in RVR.