First State Investments to Acquire Patriot Rail and Ports Business
First State Investments (FSI), a leading global investor in infrastructure, has reached an agreement with SteelRiver Infrastructure Partners, an independent investment manager, to acquire 100% of the equity of Patriot Rail and Ports, which operates a portfolio of 12 short line freight railroads with more than 585 track miles across 14 states in the United States. Terms were not disclosed.
Jacksonville, Florida-based Patriot represents the initial unlisted infrastructure investment in the U.S. by FSI, which manages more than US$8 billion of unlisted infrastructure investments across the United Kingdom, continental Europe, Australia, New Zealand and North America, with a focus on mid-market companies in the transportation and utility sectors worldwide.
As part of its acquisition strategy, FSI has partnered with MidRail LLC, a team of experienced rail industry veterans focused on originating, acquiring, and developing rail assets and operations in North America. MidRail is led by Gilbert Lamphere, a well-known railroad executive who previously served as the chairman of Illinois Central Railway and co-founder of MidSouth Rail Corporation.
"Patriot is a great addition to our global infrastructure investment portfolio and provides further diversification by sector and geography," said Danny Latham, a Sydney-based founding partner in FSI's unlisted infrastructure business. "It is consistent with our philosophy of 'buy and build' on behalf of our 100-plus global investor base including a number of pension fund and insurance company clients in the U.S. and Canada."
Patriot's operations include line haul and local rail service in addition to rail-related services such as railcar storage, transloading, railcar cleaning, scrapping, repair and maintenance, and contract switching. The Patriot ports business provides terminal stevedoring, logistics, and warehousing services across nine terminals and two cold storage facilities in the Southeastern United States. Patriot has a high quality, diversified customer and commodity mix across its portfolio, with a focus on safe and reliable service as a core value.
"The short-line freight rail sector, providing essential transportation services to industrial regions in the U.S., is a strong fit with First State's long-term infrastructure investment strategy and mandate," said John Ma, director of the New York-based FSI infrastructure team. "We are excited about the opportunity to invest in the continued growth of Patriot and support the team on their safety-focused offering to rail customers."
"More than ever, short-line rail is a key player in the efficient movement of freight in this country," John Fenton, CEO of Patriot, said. "We look forward to working with First State Investments on growing Patriot's business over the long-term, with a continued focus on delivering value, service, and safety to our customers through the dedicated effort of our employees."
"We share a similar vision and outlook with FSI for expanding a sustainable and efficient rail business in North America, and we're enthusiastic about helping build the Patriot platform," Lamphere said.
FSI (known in Australia as Colonial First State Global Asset Management) has invested in unlisted infrastructure since 1994 with a focus on mid-market transportation and utility assets. FSI established its unlisted infrastructure presence in North America in 2018 with a team in New York.
FSI was advised by RBC Capital Markets and the law firm of Mayer Brown. SteelRiver was advised by Barclays and the law firm of Winston & Strawn.