Monday, September 23, 2019

Third Largest British Rail Freight Operator Changes Hands

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UK – Investment firm EQT Infrastructure II has announced that its portfolio company Hector Rail Group has entered into a definitive agreement to sell GB Railfreight to Infracapital, the unlisted infrastructure equity arm of M&G Prudential, with the deal expected to close in mid-October 2019.

Founded in 1999, GB Railfreight is the third largest rail freight operator in the UK and provides essential freight and non-freight haulage services to its customers. The Company's team of 900 people operates over 1,000 trainloads a week, moving approximately 23% of UK's rail cargo. The Company has a fleet of over 180 locomotives and 1,500 wagons, transporting goods for a wide range of customers, including Network Rail, MSC, Bombardier, Drax, Tarmac and Aggregate Industries.

GB Railfreight was acquired by EQT Infrastructure II, through its existing portfolio company Hector Rail, in November 2016. The strategy during EQT's ownership has apparently been focused on driving sustainable growth, expanding into new segments and customers while striving to provide best-in-class, environmentally friendly transport solutions in the UK rail market. Commercial initiatives have been supported by investments into the locomotive fleet, where locomotives and wagons have been acquired to further accelerate growth. Anna Sundell, Managing Director at EQT Partners and Investment Advisor to EQT Infrastructure, said:

"GB Railfreight has continued to grow and gain market share while continuing to foster a strong safety-oriented culture and best-in-class operations, ensuring that the Company can deliver high-quality services to all its customers. Management and the entire GB Railfreight team have done a fantastic job. With the ever-increasing demand for environmentally friendly transport solutions, GB Railfreight continues to be very well positioned to continue on its strong trajectory under Infracapital's ownership."

EQT Infrastructure says that during its ownership, GB Railfreight expanded its contract portfolio by adding additional contracts from both existing and new customers, and significantly increased its share of the UK rail freight market. There has been strong focus on driving expansion in the high-growth intermodal segment, with several new routes having been launched.

Since 2016, GB Railfreight has expanded from being a one port only operator, to now having presence in several larger deep-sea ports in the UK, including Felixstowe, Southampton and London Gateway. Over the course of EQT Infrastructure's ownership, revenues have grown by 60%, while the fleet has increased by some 40%. John Smith, CEO and founder of GB Railfreight, commented:

"Together with EQT, the Company has been able to continue on our strong growth trajectory, adding a range of new freight services across the UK rail network and supporting the growth of the UK economy by transporting goods and materials across the country. We continue to see strong demand for our services and look forward to entering the next phase of growth together with our new owners."