Napier Park completes initial investment of USD370m railcar lease fund
Napier Park Global Capital’s financial partners team has completed the initial investment of the Napier Park Railcar Lease Fund, a USD370 million specialised, single-purpose private equity fund.
The fund has deployed a total of USD359 million in equity capital, or 97 per cent, within 12 months of its inception and nine months after its final closing.
This investment by the fund, along with equity capital from the fund’s joint venture partners listed below and long-term debt, has financed the acquisition of railcars representing USD2.1 billion in asset value.
“We are delighted with how successful this innovative investment opportunity has proven to be to date,” says Jim O’Brien, co-managing partner of Napier Park. “Just nine months after closing the fund we have already deployed most of the capital and secured attractive long-term, low-cost debt financing. We are grateful for the backing we have received from an impressive group of limited partners to participate in this important asset class alongside our operating partner, Trinity Industries.”
The Railcar Lease Fund was established as part of a joint venture between Napier Park and Trinity Industries Leasing Company (TILC), a wholly owned subsidiary of Trinity Industries, a diversified industrial company that includes, as one of its principal businesses, the manufacture and leasing of railcars.
The fund’s limited partners include US life and property and casualty insurance companies and family offices, and the fund now owns 54 per cent of the joint venture, comprised of ownership in the underlying operating companies, TRIP Rail Holdings and RIV 2013 Rail Holdings. A fund limited partner has also made a direct co-investment in the joint venture.
On 9 May, 2014, TRIP purchased a USD388 million portfolio of existing, leased railcars from TILC to complete the initial fleet. The portfolio purchase was financed with the issuance of long-term, asset-backed debt and previously committed equity capital. The newly issued debt has a weighted average life of 8.2 years and a blended coupon of approximately 3.8 per cent at closing. The debt is secured by TRIP’s fleet of railcars and the associated operating leases and is non-recourse to TRIP and to the fund. This most recent financing, along with the previously completed financings used to capitalise prior purchases through TRIP and RIV 2013, are in-place throughout the life of the fund.
As of 9 May 2014, on an aggregate basis, the joint venture owns a total portfolio of USD2.1 billion of railcars, based on GAAP equipment book value, with an average age of five years, on lease principally to industrial shippers. As of 31 March 2014, the railcars were 100 per cent used.
“We are particularly pleased to have established, through our partnership with Trinity Industries Leasing Company, a young, highly-diversified, fully-leased and, most importantly, economically-attractive fleet of freight and tank cars,” says Manu Rana, managing director, Napier Park Financial Partners.
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