Anchorage exits Australia rail operator

Anchorage acquired Rail First in early 2019 when it was known as CF Asia Pacific for AUD 250m. The turnaround investor remarked at the time that the company had a dominant market position but had been impacted by a drought and a slowdown in mining activity.

Rail First describes itself as a full-service, vertically integrated rollingstock leasing and maintenance services provider for the Australian rail industry, as well as the only local manufacturer of rail wagons. It claims to have the third largest intermodal fleet in the country, with more than 1,300 locomotives and wagons.

Leasing services include 24-hour help desk support and access to lower emissions locomotives to support clients’ carbon objectives. Maintenance offerings range from painting, safety accreditations, and emergency response plants to vehicle modifications and overhaul. There are two workshops, one south of Sydney and another near Adelaide.

Anchorage’s key value creation initiative was to reposition the company’s end-market exposure away from coal transport and toward long-term contracting in a growing intermodal sector, while implementing new systems and processes. Intermodal entails standardised, interchangeable freight containers and trailers.

Under Anchorage's ownership, Rail First has doubled contracted earnings within three years and materially increased contract tenor, setting the company up for further growth,” Beau Dixon, chairman of Rail First and a partner at Anchorage, said in a statement.

“Rail First is an excellent example of Anchorage identifying a complex special situation opportunity early. Prior to Anchorage’s acquisition, Rail First was an underperforming, non-core asset.”

There has also been a strong focus on environmental, social, and governance (ESG) improvements, including investment in technologies to reduce customers’ carbon footprints. Building wagons domestically is said to reduce supply chain and modern slavery risks. 

“The company is well placed to benefit from government decarbonisation initiatives, which will continue to see more freight shift from road to rail,” Vaughan Wallace, Amber’s head of Asia Pacific, added.

“Rail First is already offering lower emissions locomotives with onboard fuel-saving technologies to cater to increased customer demand for more sustainable transport options.”

Amber invests across the public, transport, energy, digital and demographic infrastructure via eight funds and various managed accounts. It has about EUR 5bn (USD 5bn) in funds under management.

DIF focuses on infrastructure in Europe, the Americas and Australasia. It currently manages 11 funds controlling about. EUR 14bn of investments. About 3% of the portfolio is rail.

Anchorage targets Australasian and Southeast Asian companies with enterprise valuations up to AUD 250m and at least AUD 100m in annual revenue. Its most recent fund closed on AUD 350m in 2017. The firm realised at least four exits in 2021, including Facilities First Australia, Solgen Energy Group, Brand Collective, and Affinity Education. 

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• Topics
• Australasia
• Industrials
• Infrastructure
• Trade sale
• Australia
• Anchorage Capital Partners
• Transportation
• Logistics