3i Group will acquire short-line railroad owner and operator Regional Rail LLC from Levine Leichtman Capital Partners, said a source close to the situation. 

Regional Rail will represent 3i’s third infrastructure investment in North America since 2017, and will serve as a platform for future investment in the sector. 

Kennett Square, Pennsylvania-based Regional Rail provides freight transportation, car storage and transloading services in New York, Pennsylvania and Delaware across three railroads,  and over 155 miles of track connecting into a diversified class 1 railroad network. In 2018, Regional Rail moved over 13,000 carloads while serving over 70 customers across a diversified set of end-user markets including fuel blending, agriculture, chemicals and metals.

The short-rail sector recently has seen assets hit the auction block including SteelRiver Infrastructure Partners, who hired Barclays to sell Patriot Rail, and publicly-listed Genesee & Wyoming, who hired BofA Securities to explore strategic alternatives.

3i outbid a Canadian infrastructure fund in a limited process to acquire Regional Rail, added the source.

Middle-market private-equity firm Levine Leichtman acquired Regional Rail in 2015.

Levine Leichtman used BMO Capital Markets as a financial advisor and Honigman as legal counsel. 3i retained Mayer Brown as legal counsel.

3i Group declined comment on the situation.

Read more