Hector Rail Group, a portfolio company of EQT Infrastructure, has agreed to sell GB Railfreight to Infracapital. No financial terms were disclosed. UK-based GB Railfreight is a rail freight operator. Simpson Thacher is advising EQT Infrastructure on the deal.
EQT Infrastructure II (“EQT Infrastructure” or “EQT”) today announced that its portfolio company Hector Rail Group (“Hector Rail Group” or “Hector Rail”) has entered into a definitive agreement to sell GB Railfreight Limited (“GB Railfreight” or the “Company”) to Infracapital, the unlisted infrastructure equity arm of M&GPrudential (“Infracapital”).
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 well above 1,000 trainloads a week, moving approximately 23 percent 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 been focused on driving sustainable growth, expanding into new segments and customers while continuing 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.
During EQT Infrastructure’s ownership, GB Railfreight successfully 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, e.g. 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, comments:
“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.”
Anna Sundell, Managing Director at EQT Partners and Investment Advisor to EQT Infrastructure, adds: “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.”
Following the sale of GB Railfreight, the remaining part of Hector Rail, consisting of Hector Rail AB with operations across Scandinavia and Hector Rail GmbH with operations in Germany, stands well prepared to continue its strong trajectory as independent train haulage and traction provider in the European rail transport market. Hector Rail offers environmentally friendly transportation services of heavy industry products, raw materials and intermodal freight to clients such as industrial companies, forwarders, and other transport companies.
The transaction is expected to close mid-October 2019.
Deutsche Bank AG acted as financial advisor and Clifford Chance LLP and Simpson Thacher & Bartlett LLP as legal advisors to EQT Infrastructure.
EQT is a leading investment firm with more than EUR 62 billion in raised capital and around EUR 40 billion in assets under management across 19 active funds. EQT funds have portfolio companies in Europe, Asia and the US with total sales of more than EUR 21 billion and approximately 127,000 employees. EQT works with portfolio companies to achieve sustainable growth, operational excellence and market leadership.
More info: www.eqtgroup.com
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About GB Railfreight
Founded in 1999 and headquartered in London, United Kingdom, GB Railfreight is the third largest rail freight operator in the United Kingdom, with a turnover in excess of GBP 200m. GB Railfreight is one of the fastest growing companies in the UK railway sector and transports goods and provides services for a wide range of customers.
Infracapital, the unlisted infrastructure equity arm of M&GPrudential, invests in, builds and manages a diverse range of essential infrastructure to meet the changing needs of society and support long-term economic growth. We take an active role in all of our investments, whether nascent or large, to fulfil their potential and ensure they are adaptable and resilient. Our approach creates value for our investors, as we target investments with the scope for stable and sustainable growth.
Our portfolio companies work closely with the communities where they are based, to the benefit of all stakeholders.
Infracapital is well positioned to deliver the significant investment required to help build the future. The founder-led team of experienced specialists has worked with 50 companies around Europe and has raised and managed over £5 billion across five funds.
M&GPrudential is a leading savings and investments business which was formed in 2017 through the merger of Prudential plc’s UK and Europe savings and insurance operation and M&G, its wholly-owned international investment manager. In March 2018, Prudential plc announced its intention to demerge M&GPrudential and give it a premium listing on the London Stock Exchange. In August 2019, M&GPrudential announced its intention to list its shares under the name M&G plc when it demerges from Prudential plc in the fourth quarter of this year.