EQT acquires US chassis leasing business

The Stockholm-based fund manager has agreed to buy DCLI, a provider of marine chassis equipment, from buyout firm Littlejohn & Co.

Swedish infrastructure fund manager EQT is to acquire Direct ChassisLink, one of the three largest companies in the US logistics industry that provide chassis equipment and asset management services.

The investment is being made through the firm's second infrastructure vehicle. EQT Infrastructure II closed on €1.92 billion in January 2013, above its original €1.5 billion target. EQT declined to disclose the transaction's financial details.

DCLI was formed in 2012 by Littlejohn & Co., a private equity firm based in Greenwich, Connecticut, following the acquisition of 64,000 marine chassis and an operations team from Danish shipping giant Maersk. Since then, DCLI has expanded its fleet to approximately 120,000 marine chassis and 90,000 domestic rail intermodal containers.

“The investment follows a very good trend and the macro drivers are positive,” EQT partner Alex Darden told Infrastructure Investor in a phone interview. “Container volumes have consistently grown faster than GDP as more products are shipped in containers, and chassis usage itself is continually increasing as distribution centres are centralised and port congestion increases.”

Spread across more than 300 depots in the US, DCLI has a strong contractual base with long-standing customers that include steamship lines, motor carriers and logistics companies.

While this is the first chassis leasing business EQT is acquiring, “it is clearly a continuation of the strategy that EQT infrastructure funds have executed over the past few years,” Darden said.

EQT’s first flagship fund had a couple of port terminal assets, while EQT Infrastructure II has several terminalling assets and a Scandinavian rail company. “DCLI is a very complementary acquisition from a macro driver standpoint and an asset-based standpoint,” Darden noted.

In addition to the fleet of chassis DCLI manages, the North Carolina-based company also has a services component that manages a large container portfolio for railroads. Michael Moore, former chief executive and president of Global Container Terminals, will serve as DCLI’s chairman.

The transaction, which is subject to regulatory approval, is expected to close within the next two months.
Asked whether EQT Infrastructure II was fully deployed, Darden responded that “EQT Infrastructure II still has capital commitments available for additional investments”.

In December, Infrastructure Investor reported that EQT is expected to raise its third fund in the second quarter of this year. The fund will have a target of between €2.5 billion and €3 billion, according to sources.