Antin makes first US Mid Cap investment with freight rail deal

Lake Street Railway Company in Michigan is a ‘unique’ asset and ‘hard to replicate’, Antin senior partner Kevin Genieser tells us.

Antin Infrastructure Partners has secured the first US investment for its new Mid Cap strategy with an investment in Lake Street Railway Company (LSRC) in Michigan, marking its fourth deal in the US across all strategies.

LSRC operates 375 miles of railroad for freight rail transportation in the Great Lakes state, in addition to associated locomotives and railcars. The group’s railroads provide access between Michigan and the broader US and Canadian markets, Antin said in a statement.

“This is a unique network in a very important state in the US and there’s potential for economic growth,” Kevin Genieser, senior partner at Antin, told Infrastructure Investor. “It’s hard to replicate this and is very much a unique asset.”

Outlining the asset’s potential for expansion, Genieser highlighted environmental tailwinds, including Michigan’s coal history, which could play in LSRC’s favour.

“Michigan is a big provider of gypsum products and most of the coal-fired generation is being phased out, and there’s an opportunity to move over towards more natural forms of gypsum,” Genieser explained. “Competition comes primarily from trucking and, amid fuel costs and driver shortages, rail is positioned well economically and environmentally to do very well in years to come.”

As well as being the third investment from Antin Infrastructure Partners Mid Cap I, which closed in June last year on €2.2 billion, LSRC is Antin’s fourth deal in the US overall, which began with the investment in FirstLight Fiber in February 2018. The other two are renewable energy developer Origis Energy and Vicinity Energy, the largest district energy portfolio in the US.

North American assets are set to comprise about 30 percent of Mid Cap I’s total portfolio, which is investing ticket sizes of between €50 million and €300 million. The vehicle targets gross returns of 15 percent.