Leading Bahrain Islamic investment bank, Arcapita, is believed to have won the tender for the large UK freight company, Freightliner Group, and will announce the purchase within the next few weeks.
Freightliner, whose wagons carry inland freight containers to inland terminals, is the UK's second large rail freight company.
The acquisition price is expected to be US$700m (Dh2.5bn). Private equity firms Electra and 3i, bought Freightliner for £10m in 1996 when it was privatised and together own 76 per cent of the company.
Freightliner has one of the most comprehensive rail networks in the UK. Its fleet consists of over 175 locomotives, including 127 new Class 66s, and more than 2,500 wagons, including newly built coal hoppers, flats and aggregate wagons. The group's core activity, operated through specialist subsidiary companies, is the movement of freight by rail, ranging from the rail haulage of commodities such as aggregates and coal.
Since privatisation, the Freightliner Group has developed into a profitable logistics company with a modern fleet of locomotives, rolling stock and lorries. It has retained its market-leading share of the UK intermodal market and has developed a significant and growing share of the UK's bulk rail freight market. Intermodal traffic has grown particularly rapidly in recent years with soaring imports of containerised goods from Asia. Demand for coal has boosted the heavy haul division. The annual group turnover is in excess of $460m.
The UK has one of Europe's fastest-growing rail freight markets, aided by government subsidy of some investments and relatively low fees for using track; freight trains pay only for the extra costs they impose on Network Rail, owner of the rail infrastructure.
Arcapita was competing with France's state-owned train operator, SNCF, which had looked at Freightliner as part of a Europe-wide acquisition programme.
There is noted potential in Britain's fast-growing rail freight sector, first vindicated by Germany's Deutsche Bahn acquiring EWS, the largest company in the sector, in 2007. Freightliner was the only part of British Rail's freight operations not to end up as part of EWS, which was assembled by Ed Burkhardt, a US rail entrepreneur.
Going forward, the UK freight market should remain strong, in part capitalising on the record high oil and petrol prices and the government's support for the rail sector. Arcapita has comfortably the financial and capital strength, together with the liquidity, to support the acquisition of Freightliner. Its leverage is low at just over one times and it has strong capital adequacy based on both Basel and Basel II methodology.