The Pan-African Infrastructure Development Fund 2 (PAIDF2) has concluded an investment into Sheltam Mauritius, which is the parent company of South African locomotive and rail operator Sheltam Group.
This investment was made through a share subscription for 30% of Sheltam for an undisclosed sum.
Immediately prior to the investment, Sheltam Mauritius restructured its shareholder debt obligations. Private investment group Principle Capital is the controlling shareholder of Sheltam Mauritius, while Sheltam founder Roy Puffet will remain part of the group.
The PAIDF2 Fund is managed by Harith General Partners, a leading pan-African fund manager for infrastructure development across the continent. Harith manages more than $1-billion, all of which is geared towards infrastructure in Africa.
Sheltam will be able to take new deals to the PAIDF2 investment committee on a case-by-case basis.
PAIDF2 head Emile du Toit notes that the fund sees in Sheltam “a company with outstanding technical ability that has stood the test of time”.
“Importantly, we see Sheltam as a solid platform for growth and development that we can work . . . with to unlock rail projects in South Africa and across the continent,” he says.
Sheltam CEO James Holley highlights that, while Sheltam has outstanding technical capability built up over 30 years of rail operations in Africa, Harith, a black-owned fund manager, has deep financial capacity through PAIDF2 and a sound understanding of project finance.
“The combination of the two makes us well placed for Transnet’s multibillion-rand private-sector participation programme and public–private partnerships with local and national government,” he says.
While many of the railways of Africa are yet to live up to their potential, Sheltam aims to build a company that gives governments, private and public railways, mines and industry a platform to reach their full potential, Holley says.
“Railways were the transformational backbone of industry for most developed nations and we believe it is time for railways to be the same for Africa,” he stresses.
Holley further highlights that a successful rail operation in Africa requires, among others, technical knowledge, rolling stock and investment into track.
“We have set up and geared ourselves to provide these key elements [for] projects. We will now seek close collaboration with original-equipment manufacturers (OEMs), construction companies, project developers and, most importantly, freight owners, as we look to roll out this vision,” he emphasises.
Sheltam will soon officially launch two initiatives aimed at adding significant capacity to the company’s ambition to be a significant rail operator on the African continent.
The first initiative is the launch of a ring-fenced and dedicated rolling stock leasing company. The Sheltam leasing company will seek to provide lease finance and off-balance-sheet solutions to complement the sales and marketing activities of the locomotive, wagon and commuter rail OEMs that are active in Africa.
The second is a dedicated rail projects platform that will seek to invest in concession companies, rail track upgrades and new build projects and investments into associated infrastructure.
This will be the first dedicated rail track infrastructure platform focused exclusively on Africa.
This transaction also heralds an exciting new beginning for Sheltam, with the company to conclude several key projects. Sheltam has started a substantial reinvestment programme into its existing fleet of 44 EMD and General Electric (GE) locomotives and has concluded the purchase of an additional three, nine-year old GE C30EMP locomotives from the PME Infrastructure Fund.
Holley adds that, as Sheltam has built a reputation for being “the leaders” in quality and cost-effective rail services, the company’s investment into the fleet ensures that it will be able to maintain this market position.