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First State Investments Near Deal to Buy Patriot Rail

Gillian Tan

(Bloomberg) -- First State Investments agreed to buy Patriot Rail & Ports, an operator of short-line railroads in 14 U.S. states, from SteelRiver Infrastructure Partners.

The transaction values the Jacksonville, Florida-based transportation company at more than $750 million, according to a person familiar with the matter who asked not to be identified because the terms haven’t been disclosed. The deal was reported earlier Monday by Bloomberg.

“Patriot is a great addition to our global infrastructure investment portfolio,” said Danny Latham, a Sydney-based partner at First State Investments, in a statement. MidRail LLC, led by longtime rail executive Gilbert Lamphere and Raj Gupta, is a partner in the transaction alongside First State.

Patriot operates 12 regional and freight short-line railroads and a scenic rail excursion train with tracks that span states including Texas, Louisiana, Georgia and Florida, according to its website. SteelRiver, which has owned Patriot since 2012, was working with an adviser to find a buyer, people familiar with the matter said in February.

SteelRiver, which was formed by a management buyout after Babcock & Brown LP shut in 2009, has been shedding companies from its portfolio. In July, it completed the sale of Trans Bay Cable LLC, a San Francisco-based underwater transmission system, for about $1 billion to a unit of NextEra Energy Inc. A consortium led by SteelRiver agreed in October to sell gas utility Peoples to Aqua America Inc. for almost $4.28 billion in a deal that’s still pending.

Earlier this month, Mitsubishi UFJ Trust and Banking Corp., a unit of Mitsubishi UFJ Financial Group Inc., gained control of First State Investments following its $2.7 billion purchase of the group from Commonwealth Bank of Australia. First State manages more than $8 billion of unlisted infrastructure across the globe, primarily in the transportation and utility sectors.

The Patriot transaction is the second sizable rail deal this year. In July, a Brookfield Asset Management Inc.-led group agreed to buy Genesee & Wyoming Inc. for more than $6 billion.

(Updates with more specific price range in second paragraph.)

To contact the reporter on this story: Gillian Tan in New York at gtan129@bloomberg.net

To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net, Michael J. Moore, David Scheer

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