Pamplona acquires UK rail leasing business

Pamplona Capital Management has acquired Beacon Rail Leasing (Beacon), a locomotive and rolling stock leasing company, from BTMU Capital Corporation, a subsidiary of Japan’s Mitsubishi UFJ Financial Group.

The UK-based private equity firm has paid $450 million for the company. The acquisition will be funded by Pamplona Capital Partners III, a private equity vehicle which closed on €2 billion in 2011.

Headquartered in London, Beacon’s portfolio comprises 77 locomotives, 632 freight wagons and 20 passengers train units on lease in the UK, France, Belgium, Norway, Sweden and Germany. The company has additional offices in Boston and Rotterdam.

As part of the deal, Beacon has ordered a further 15 diesel-electric and 10 dual-mode locomotives from Vossloh España for lease to freight operator Direct Rail Services in the UK. These will be delivered from 2014 through 2016, increasing Beacon’s fleet to 102 units.

The business now counts three of the largest freight operators in the UK as well as European players including Germany’s RheinCargo, France’s Europorte and Norway’s CargoNet.

“Operators are increasingly leasing locomotives and rolling stock as the rail transportation market grows, driven by deregulation and a growing focus on efficient alternatives to road transportation,” commented Robert Warden, a partner at Pamplona, in a statement.

The deal comes after US-based Kohlberg Kravis Roberts made the first investment by its $1 billion infrastructure fund in Germany and Austria through backing European Locomotive Leasing, a train leasing business operating in continental Europe, at the end of March. The €200 million deal included the order of an additional 50 Siemens locomotives.