KKR invests in locomotive leasing business

The deal is the first direct investment in Austria and Germany by the US firm’s $1bn infrastructure fund.

Kohlberg Kravis Roberts today announced an investment in European Locomotive Leasing (ELL), a train leasing business operating in continental Europe.

The New York-based asset manager is seeking to capitalise on the liberalisation of rail traffic and the rise of private train operators on the continent, which the firm says will likely favour leasing rather than owning rolling stock.

ELL, which has staff based in Austria and Germany, today confirmed an order for 50 Siemens Vectron locomotives. The first locomotives will be delivered immediately, with the balance to be supplied from 2014 through 2016.

The deal is worth about €200 million, a KKR spokeswoman told Infrastructure Investor.

The investment, KKR’s 11th infrastructure deal since branching out into the asset class, is the first by its Global Infrastructure Fund in the region. Launched in 2008, the vehicle reached a final close on $1 billion in June 2012.

“Today's announcement represents another exciting step in the growth and diversification of our infrastructure platform in Europe, following earlier investments in onshore wind, solar, water, district heating and parkings,” said Jesús Olmos, head of KKR infrastructure in Europe, in a statement.

The fund is backed by limited partners including Leicestershire County Pension Fund, Maine Public Employees Retirement System, Michigan Department of Treasury and San Antonio Fire and Police Pension Fund. It is part of KKR’s $4 billion real asset platform, which also includes a $1.6 billion natural resources fund.

The firm is currently seeking to collect $1.5 billion for a new energy-focused vehicle targeting oil and gas development projects.

KKR had raised $1.4 billion for the fund as at end of Q3 2013, according to Infrastructure Investor Research & Analytics. This includes a $250 million commitment from KKR itself.