Overview

Formed in 2007, 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 to a diversified Class 1 railroad network.

In 2018, the company moved over 13,000 carloads while serving over 70 customers across a diversified set of end-user markets including heating, fuel blending, agriculture, chemicals, and metals. The company’s wholly owned subsidiary, Diamondback Signal, is the premier provider of rail-crossing installation and maintenance services to over 100 short-line rail customers across 20 states.

In October 2019, Regional Rail acquired Pinsly Railroad Company’s Florida operations adding 208 miles of track across three short-line railroads.

Investment rationale

• Essential service provider with high barriers to entry - irreplaceable track infrastructure with direct access to key customer facilities and multiple Class I railroad connections
• Premium geography in the Northeast U.S. - located at the centre of a densely populated corridor within the New York, Philadelphia, Baltimore, and Washington DC metro areas
• Freight revenue is largely generated from local consumption tied to these attractive end markets
• Strong freight revenue growth of >9% p.a. since 2013
• Attractive platform for consolidation as short-line rail space is ripe for consolidation; acquisition of Pinsly Railroad Company’s Florida operations in October 2019

Regulatory information 
This transaction involved a recommendation of 3i Corporation, a US wholly owned subsidiary of 3i Group.