Napier Park Global Capital’s financial partners team has held a final closing of Napier Park Railcar Lease Fund, a USD370m specialised, single-purpose private equity fund, with an additional direct co-investment of USD50m from a fund limited partner.
The Railcar Lease Fund has partnered with Trinity Industries, a diversified industrial company that includes as one of its principal businesses the manufacture and leasing of railcars, to create RIV 2013 Rail Holdings, a joint venture to invest in leased railcars.
The fund’s capital, along with a direct co-investment from a fund limited partner and capital from Trinity Industries Leasing Company (TILC), a wholly-owned subsidiary of Trinity, was also used to recapitalise TRIP Rail Holdings, an existing joint venture that owns a pool of leased railcars. TILC provides servicing to both TRIP and RIV 2013.
As of 30 June 2013, the combined entities owned a total portfolio of USD1.5bn of railcars on lease to industrial shippers and railroads. The combined portfolio is expected to grow to a railcar value of USD2.0bn by the end of 2014.
“We are excited about the opportunity to partner with Trinity Industries, a leader in railcar manufacturing and leasing,” says Jim O’Brien, co-managing partner of Napier Park Global Capital. “This investment is a clear example of Napier Park’s ability to identify and develop innovative, attractive investments for our clients. Along with our limited partners, we look forward to a long and mutually beneficial relationship with Trinity.”
The fund’s limited partners include a number of leading US life and property casualty insurance companies. The fund, which was oversubscribed, now owns 48 per cent of TRIP and 61 per cent of RIV 2013.
“We believe the railcar leasing industry provides a differentiated, durable and cash-yielding investment opportunity for our limited partners,” says Manu Rana, managing director, Napier Park Financial Partners. “We are investing alongside the US railcar industry’s leading manufacturing-lessor, and our investment in a leading railcar lease fleet will benefit from structural shifts toward increased rail transportation.”
“The long-term equity capital Napier Park was able to raise from a prestigious group of institutional investors will provide us with greater financial flexibility to support the continued growth of our railcar lease fleet,” says senior vice president, Trinity Industries and group president of Trinity Rail, D Stephen Menzies. “We are delighted to have achieved this important strategic objective, and we look forward to working with Napier Park to access additional long-term equity capital for continued growth.”
