Target Information

Rail First, formerly known as CF Asia Pacific, is Australia's premier provider of full-service vertically integrated rolling stock leasing and maintenance solutions for the rail industry. As of January 2020, the company was acquired by Anchorage, having previously been a subsidiary of Sasser Family Holdings Inc. Rail First faced significant challenges before the acquisition, characterized by underperformance due to accelerated growth and an aggressive capital asset purchasing program. The company struggled with consistency in contracting principles and yielded poor returns on capital.

Anchorage recognized the potential of Rail First's operations and assets, taking note of the significant operational improvement and growth opportunities available. A strategy to refocus the business towards the intermodal market was implemented, aligning the company's strengths with the growing needs of this resilient sector.

Industry Overview in Australia

The rail industry in Australia is a vital part of the nation's transport infrastructure, supporting both freight and passenger operations. The sector has witnessed a resurgence in investment due to the increasing demand for efficient transport solutions, particularly in intermodal logistics which combines multiple modes of transportation for optimized freight delivery.

The Australian government has committed substantial funding to enhance rail infrastructure, recognizing the role of rail in reducing road congestion and improving environmental sustainability. This investment fosters an environment ripe for growth within the rail leasing and services market, particularly for companies like Rail First that specialize in leasing rolling stock and providing maintenance solutions.

Additionally, a greater emphasis on sustainability and the need to reduce carbon emissions are influencing the industry's direction, prompting many rail operators to seek innovative, environmentally-friendly solutions. Companies that can adapt to these trends stand to benefit significantly as the industry evolves.

As a leader in this space, Rail First is poised to capitalize on these developments, offering comprehensive services that support both traditional and modern rail logistics needs. The growing intermodal market aligns well with its strategic positioning and operational capabilities.

Rationale Behind the Deal

The acquisition of Rail First by Anchorage was driven by a recognition of the underlying value within the business, coupled with a series of identified operational improvements necessary for revitalization. The focus on leveraging Rail First's core capabilities in the intermodal market presented Anchorage with a unique opportunity to enhance not only the company's performance but also the market potential for growth.

By implementing a robust operational improvement program, Anchorage aimed to rectify inconsistencies while simultaneously preparing Rail First for an upward trajectory in profitability and market relevance.

Investor Information

Anchorage is an investment firm with a strong track record of identifying underperforming assets and transforming them into profitable entities through strategic operational enhancements. Known for its deep understanding of operational efficiencies and growth markets, Anchorage provided Rail First with the necessary guidance and resources to execute a comprehensive turnaround strategy.

The firm's expertise extends across various sectors, including infrastructure and logistics, enabling it to effectively assess and enhance the operational potential of entities like Rail First. This background positions Anchorage as a powerful influence in maximizing Rail First's capabilities and future growth prospects.

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The acquisition of Rail First by Anchorage exemplifies a strategic investment move that has already yielded commendable results. By focusing on operational improvement and identifying growth potentials, Anchorage has successfully nearly doubled Rail First's contracted EBITDA. This indicates that the deal was not only a sound investment at the outset but also positioned Rail First for sustained growth in a flourishing sector.

The integration of innovative practices such as the return to domestic wagon manufacturing further enhances Rail First's market positioning, tying into the broader trend of supporting local manufacturing. Anchorage’s focus on sustainability through the complete exit of coal exposure aligns well with global movements towards environmental responsibility, boosting the appeal of Rail First in today’s market.

Furthermore, the sale process initiated by Anchorage post-acquisition indicates a well-planned exit strategy, highlighting the operational improvements and growth trajectory established within Rail First. The involvement of leading global infrastructure investors, including Amber Infrastructure and DIF Capital Partners, in the sale signifies the high regard in which Rail First is held and the potential value perceived by the market.

Overall, the strategic methodologies applied during Anchorage's ownership of Rail First have made for a fruitful investment, with the future prospects of the company suggesting continued success in the competitive rail industry.

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