Pamplona in $450m rail deal

The firm acquired Beacon Rail Leasing using capital from its $2.7bn Fund III.

UK-based Pamplona Capital Management has acquired Beacon Rail Leasing, a locomotive and rolling stock leasing company, from BTMU Capital Corporation, a subsidiary of Japan’s Mitsubishi UFJ Financial Group, according to a statement.

The firm paid $450 million for Beacon, of which one third was equity, with the remaining two thirds comprised of debt, according to a source familiar with the matter. Debt financing for the transaction was provided by ING Bank NV. Pamplona declined to comment beyond the statement.

UK-based Beacon’s current portfolio includes 77 locomotives, 632 freight wagons, and 20 passenger train units on lease in the UK, France, Belgium, Norway, Sweden and Germany. The company has additional offices in Boston and Rotterdam. The business counts three of the largest cargo operators in the UK as well as European players including Germany’s RheinCargo, France’s Europorte and Norway’s CargoNet as customers.

The opportunities for rail leasing are quite attractive, Pamplona said in a statement. “Operators are increasingly leasing locomotives and rolling stock as the rail transportation market grows, driven by deregulation and a growing focus on efficient alternatives to road transportation,” according to Robert Warden, a partner at Pamplona.

Pamplona made the investment using capital from the firm’s $2.7 billion Fund III, a 2011 vintage.

Last month, Pamplona acquired a majority stake in pharma business Alvogen. That deal valued the business at approximately $700 million, the source added.

Pamplona’s Fund III invests in both Europe and North America. The firm was founded in 2005 with its €322 million debut buyout fund and has private equity investment professionals in London and New York.