Global consortium acquires Porterbrook

Allianz, AIMCo, Hastings and EDF Invest have agreed to buy the UK rolling stock business from investors including iCON, Antin and OPTrust.

A consortium of infrastructure investors has taken over UK rail rolling stock leasing business Porterbrook for an undisclosed sum, it was announced on Friday.

The group includes Allianz Capital Partners, the private equity arm of German insurer Allianz, as well as Canada’s Alberta Investment Management Corporation (AIMCo), Australian fund manager Hastings Funds Management and EDF Invest of France.

The transaction, expected to close by the end of October, will provide an exit to Porterbrook’s current owners, which initially invested in the company in December 2008. These comprise the UK’s iCON Infrastructure, Deutsche Bank, Paris- and London-based fund manager Antin Infrastructure Partners and Canadian pension OPTrust.

Lloyds TSB, part of the original consortium, divested its stake in December 2010.

Porterbrook owns and leases rolling stock to UK train and freight operating companies, such as South West Trains, First Great Western and Northern Rail, under long-term agreements. Its portfolio comprises about 5,900 vehicles and represents approximately one third of the UK’s passenger rolling stock fleet.

Last May, the company successfully completed a refinancing of its senior bank and junior debt facilities – which extended debt maturities and raised £1.2 billion of new debt – upon which its shareholders issued a statement saying that they were “exploring options” including a “possible sale of their interests”.

The deal, expected at the time to reach about £2 billion (€2.5 billion; $3.2 billion), follows a busy first half of the year for the sector. Last May, London-based Pamplona Capital acquired the UK’s Beacon Rail from a subsidiary of Japan’s Mitsubishi UFJ in a $450 million transaction; Australia’s AMP Capital upped its stake in Luxembourg’s Alpha Trains from 15 percent to 20.9 percent; and Californian firm Oaktree Capital Management bought Munich-based Railpool from two German banks.

This was after Kohlberg Kravis Roberts invested in Austrian/German business European Locomotive Leasing in a €200 million deal last March; Dutch-based DIF also partnered on a €140 million rolling stock project with Hamburg’s Paribus Capital and the German state of Schleswig-Holstein in April.

“We are delighted to welcome AIMCo, ACP, EDF Invest and Hastings as new investors to our business. Their long term approach and capital resources will position Porterbrook well to lead the next phase of growth in the rail industry,” commented Paul Francis, managing director of Porterbrook, in a statement.

Industry insiders say the rolling stock leasing sector is braced for growth in Europe, amid political pressure to put more freight on trains and the rail sector’s liberalisation bringing a fresh array of private operators to the market. Eager to keep their balance sheets light on assets, these are keen to lease trains rather than own them.