Oaktree makes first investment from transportation fund

08 January 2019 - 12:00 am UTC

Oaktree invested USD 450m of non-controlling equity capital in Watco Companies, a Kansas-based transportation business, the firms announced.

The commitment is Oaktree’s first investment from its Transportation Infrastructure Fund, Inframation understands. That fund had raised USD 1.052bn as of 30 June, as previously reported.

The investment will back Watco’s improvement strategy and its customer growth initiatives, according to the 4 January press release.

Both firms expect the capital commitment to increase over time.

Along with the capital infusion, Watco aims to tap into Oaktree’s experience in the transportation sector. With the deal, Oaktree transportation infrastructure strategy co-head Josh Connor and senior advisor Dave Starling are set to join Watco’s board of managers.

“Oaktree brings its specialized team of transportation experts, a strong understanding of the sectors in which we operate, deep industry relationships, and years of investment experience,” Watco CEO Dan Smith said in the press release.

Goldman Sachs (financial) and Shearman & Sterling (legal) advised Oaktree on the deal, Inframation has learned. 

Originally an industrial switching firm, Watco now operates 41 short line railroads in the United States and Western Australia. The firm’s subsidiaries also include a terminal and services group, which operates in in the US and Mexico; a mechanical services group active in North America; and a supply chain services platform, along with its switching business.

The Oaktree Transportation Infrastructure Fund originally considered a dual approach focusing on both transport and energy, but later dropped energy from the fund’s strategy.

The fund is also part of a shortlisted consortium for a public-private partnership to build an office building, hotel, parking garage and other development at Sky Harbor International Airport in Phoenix, as reported.

 

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