Macquarie, PGGM Seek Bidders for $1.9 Billion One Rail Australia

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May 20 2021, 8:16 AMMay 20 2021, 8:27 AMMay 20 2021, 8:16 AMMay 20 2021, 8:27 AM

(Bloomberg) -- Macquarie Group Ltd. and Dutch pension fund manager PGGM have started reaching out to prospective bidders for a potential sale of rail freight operator One Rail Australia, according to people familiar with the matter.

Macquarie Infrastructure & Real Assets and PGGM sent out marketing materials this week on the former Australian arm of Genesee & Wyoming Inc., the people said. A deal could value the rail freight service provider at more than A$2.5 billion ($1.9 billion), said one of the people, who asked not to be identified discussing confidential matters.

The company is expected to generate revenue of about A$475 million in 2021 and earnings before interest, taxes, depreciation and amortization of about A$235 million, the person said.

Any deal for what is one of Australia’s largest rail operators would underscore Macquarie’s increasing focus to steer its investment away from coal-related activities to more environmentally-friendly initiatives. One Rail Australia runs intermodal services on the Adelaide to Darwin corridor and provides coal haulage services in the Hunter Valley Coal Chain from numerous operating mine sites, according to its website.

The owners could consider bids for the entire One Rail Australia operations or separate offers for the coal and non-coal businesses, according to one of the people.

MIRA and PGGM in 2019 agreed to acquire the rest of Genesee & Wyoming’s Australia business that the duo hadn’t owned at that time. The operation was later renamed as One Rail Australia. In January, the Australian Financial Review reported that Macquarie tapped its own investment bank and Credit Suisse Group AG to help review its options for the business.

Deliberations are ongoing and the owners of One Rail Australia could decide to keep the business, the people said. Representatives for Macquarie and PGGM declined to comment, while a representative for One Rail Australia didn’t immediately respond to requests for comment.