EQT Infrastructure II, through its portfolio company Hector Rail Group, has entered into a definitive agreement to sell GB Railfreight Limited to Infracapital, the unlisted infrastructure equity arm of M&GPrudential (Infracapital).

Founded in 1999, GB Railfreight is the third largest rail freight operator in the UK and provides essential freight and non-freight haulage services to its customers. The Company’s team of 900 people operates well above 1,000 trainloads a week, moving approximately 23 percent of UK’s rail cargo. The Company has a fleet of over 180 locomotives and 1,500 wagons, transporting goods for a wide range of customers, including Network Rail, MSC, Bombardier, Drax, Tarmac and Aggregate Industries.

GB Railfreight was acquired by EQT Infrastructure II, through its existing portfolio company Hector Rail, in November 2016. The strategy during EQT’s ownership has been focused on driving sustainable growth, expanding into new segments and customers while continuing to provide best-in-class, environmentally friendly transport solutions in the UK rail market. Commercial initiatives have been supported by investments into the locomotive fleet, where locomotives and wagons have been acquired to further accelerate growth.

During EQT Infrastructure’s ownership, GB Railfreight successfully expanded its contract portfolio by adding additional contracts from both existing and new customers, and significantly increased its share of the UK rail freight market. There has been strong focus on driving expansion in the high-growth intermodal segment, with several new routes having been launched. Since 2016, GB Railfreight has expanded from being the one-port only operator to now having a presence in several larger deep-sea ports in the UK, e.g. Felixstowe, Southampton and London Gateway. Over the course of EQT Infrastructure’s ownership, revenues have grown by 60%, while the fleet has increased by some 40%.

Following the sale of GB Railfreight, the remaining part of Hector Rail, consisting of Hector Rail AB with operations across Scandinavia and Hector Rail GmbH with operations in Germany, stands well prepared to continue its strong trajectory as independent train haulage and traction provider in the European rail transport market. Hector Rail offers environmentally-friendly transportation services of heavy industrial products, raw materials and intermodal freight to clients such as industrial companies, forwarders, and other transport companies.

The transaction is expected to close mid-October 2019.

Deutsche Bank AG acted as financial advisor and Clifford Chance LLP and Simpson Thacher & Bartlett LLP as legal advisors to EQT Infrastructure.