Vauban, AustralianSuper team up in bid for SNCF subsidiary – exclusive

The Vauban-led consortium, which also includes Swiss Life, is understood to be one of four bidders for Ermewa Group, the second-largest industrial railcar lessor in Europe.

Vauban Infrastructure Partners has teamed up with Australia’s largest pension fund and Swiss Life in a bid to acquire 100 percent of Ermewa Group, the wagon-leasing company of French national railroad operator SNCF, Infrastructure Investor has learned.

SNCF has been considering the sale of the subsidiary, but prioritised it last year as a result of the significant impact covid has had on its balance sheet. SNCF first invested in Ermewa in 1992, gradually increasing its ownership to 100 percent by 2010.

“SNCF Group’s full-year results for 2020 reflect the economic impact of the covid-19 crisis,” the firm said in February, when it announced its 2020 results. Revenues were down 14 percent year-on-year, with a €6.8 billion loss attributed to the pandemic, while SNCF’s net indebtedness stood at €38.1 billion.

In addition to Vauban, AustralianSuper and Swiss Life, Infrastructure Investor understands that three other bids have been submitted by Global Infrastructure Partners; Antin Infrastructure Partners; and DWS, which has partnered with Canadian pension CDPQ.

All firms declined to comment, except for AustralianSuper and GIP, which were not immediately available at the time of publication.

Ermewa, which has a fleet of more than 42,000 railcars, 60,000 tank containers and six workshops, according to its website, leases railcars throughout Europe and tank containers globally, through subsidiaries Eurotainer and Raffles Lease, serving clients across a range of industries, including steel, chemicals, construction, and agribusiness.

The company is valued at around €2.1 billion, according to SNCF Group’s annual financial report published in December.

While Ermewa is the second-largest industrial railcar lessor in Europe, whoever acquires the company will have to invest in renewing its ageing fleet. “There is capex ahead,” a source told Infrastructure Investor. “But this is good if you’re looking for long-term capital appreciation; it’s an ambitious programme, which can create long-term value,” the source added.

According to Transport Investment Ltd, a UK-based consulting firm advising transportation operators and investors, “The opportunity for Ermewa is very large. Indeed, the market scope for rail freight may be the greatest for over 60 years.”

That certainly seems to be the case in Europe at least, where the rail sector – both passenger and freight – has been targeted by the EU as a means towards the bloc’s green recovery. And earlier this week, French MPs voted to suspend domestic short-haul flights on routes that can be accessed directly by rail in two and a half hours in an effort to fight climate change.