Dallas-based private equity firm Paceline Equity Partners has acquired Progress Rail Equipment Leasing Corp. (PRELC) from a subsidiary of Caterpillar (NYSE: CAT).
The assets belong to Caterpillar subsidiary Progress Rail, which leases railroad maintenance-of-way (MOW) equipment and services.
The parties didn’t disclose the financial terms of the transaction.
“PRELC represents an ideal opportunity for Paceline to invest in an asset-rich operating platform with strong and stable cash flows,” said Paceline CEO Sam Loughlin. “Non-discretionary demand stemming from the need to maintain America’s railroad infrastructure remains robust and we expect this business to perform well across various economic cycles, particularly during today’s late-stage economic cycle.”
PRELC leases rail equipment for maintenance-related activities such as railroad tie replacement, ballast adjustments, rail grinding and resurfacing, railroad switch modifications, and bridge inspection and test work. The company also has an in-house maintenance operation.
PRELC’s headquarters is outside of Detroit, Michigan, with an office in greater St. Louis, Missouri.
“As a leading supplier to the global rail industry, we continuously review our business for overall efficiency and competitiveness. After evaluating our MOW leasing business, we believe it will benefit the company to take these steps to be more efficient in the near-term and more competitive long-term,” said John Newman, Progress Rail’s executive vice president of infrastructure.
“While we are exiting the MOW equipment leasing business, Progress Rail will continue to produce Kershaw MOW and vegetation management equipment,” Newman said.
The deal, announced on Jan. 2, is just another example of private equity companies that have invested in infrastructure assets within the last several years.