Equity Group Investments (EGI) has offered its sponsorship to US-based railroads operator and owner International Rail Partners (IRP) to support the formation of RailUSA.
EGI has led a group of co-investors, including IRP, in a commitment valued at more than $200m for RailUSA to carry out short-line and regional railroad investment opportunities.
RailUSA is a railroad that transports nearly 10,000 carloads of freight per year.
In August, the company made its first investment with the purchase of Grenada Railroad, a 206-mile rail line between Memphis, Tennessee and Canton, Mississippi.
RailUSA, along with North Central Mississippi Regional Railroad Authority (NCMRRA), expects to restore and re-open the 87-mile long southern portion of the Grenada line, which was closed down in 2011.
EGI co-president Mark Sotir said: “The rail industry is a durable, recession-resistant sector with strong cash flow characteristics.
“With an increasing need for first and last mile solutions to the customer, we see ongoing opportunities in the space.”
Around 50,000 miles, which is 36% of the US’s 140,000 miles of freight rail lines, belong to the categories of short-line and regional railroads.
IRP CEO Gary Marino said: “All of us at International Rail Partners are very excited to be partnering with Equity Group Investments. Their past railroad industry experience coupled with their flexible capital approach to investing and IRP’s robust rail acquisition pipeline positions us well to maximise the value of RailUSA.”