Allstate Investments in railcar leasing joint venture

Allstate Investments , the US insurer's investment manager, has teamed up with private investment firms Duchossois Capital Management (DCM) and CC Industries to launch Riverside Rail, a railcar leasing company.

The investors, who are all based in Chicago, have acquired a mixed fleet of 2,032 railcars, including covered hoppers, coal cars, mill gondolas, boxcars and centerbeams, the firms said in a joint statement.

“The investor group believes railcar leasing represents an attractive long-term investment and seeks to grow this initial railcar investment into a larger railcar leasing fleet,” the investors commented. “Riverside Rail plans to build a full-service leasing and management services company over the next several years.”

The three firms did not disclose the transaction's terms.

Asked whether the new company will fall under Allstate Investments' infrastructure and real assets portfolio, the firm's spokesperson Maryellen Thielen responded: “Over the past several years, Allstate has increased its holdings of higher-returning, less liquid private equity and real estate investments, which provide attractive returns relative to their risk.”

“Rail car leasing investments fit well within our performance-based long-term portfolio, as these investments have attractive characteristics as hard assets with imbedded inflation protection,” she said, adding that Allstate likes partnering with small groups of like-minded investors, like the Duchossois Group, and Henry Crown and Company, which have experience in the asset class and a long-term, conservative mindset.

The Duchossois Group comprises the private investment firm DCM as well as The Chamberlain Group and Controlled Products Systems Group, two operating companies. According to the Duchossois Group website, the company's operating roots trace back to 1916 with a small freight car repair shop in Chicago. It is unclear whether the group's history played a role in this current investment as the group's two operating companies are not related to the rail industry. The company did not respond to a request for comment.

CC Industries, which operates under the umbrella of Henry Crown and Company, owns and operates a diversified group of industrial manufacturing companies, including businesses in the transportation and process equipment industries.

Riverside Rail will most likely be based in Chicago, Allstate's spokesperson said.