Fenway invests in diversified Canadian transport firm
Fenway Partners said last week it has a firm contract to acquire majority control of Canadian motor carrier Fastfrate, making clear in the process that the turmoil in the credit markets and with interest rates has not entirely scared off investors from doing deals. Terms were not disclosed.
New York-based Fenway, a mid-sized private equity firm with $2 billion under management, has made the logistics industry one of its core investment targets this decade. It owns expedited ground trucking company Panther Expedited Services and intermodal short-haul carrier RoadLink USA, as well as a minority share in Greatwide Logistics. The firm sold control of Greatwide, a primarily non-asset-based company providing dedicated contract carriage, truckload, distribution and warehousing services, to private investors Investcorp and Hicks Holdings one year ago.
Altogether it has completed 26 deals in the logistics sector worth $2.26 billion, excluding the Fastfrate acquisition, according to company officials.
Fastfrate is a privately owned Canadian less-than-truckload carrier that also offers intermodal, truckload, warehousing, transloading, national port and railhead drayage, and logistics services. It has nearly 1,600 employees and annually moves 2 billion tons of freight through its piece shipment network.
The company touts that it is the largest LTL user of railroads, with an exclusive relationship with Canadian Pacific Railway under which 16 of its 17 freight terminals are located adjacent to CP intermodal yards. When it’s planned hub is completed in Edmonton it will have facilities co-located at every CP intermodal yard in Canada, Fenway said.
In January the company opened a sales office in China and handles 25,000 ocean containers per year from that origin. Fastfrate acquired Cambridge, Ontario-based Koch Transport International more than two years ago and now offers cross-border truckload service throughout the United States.
As part of the transaction, Frastfrate Chief Executive Officer Ron Tepper and other senior managers will have a 25 percent ownership stake in the company. It is common practice at Fenway to get executives of acquired companies to share in the investment as an incentive to pursue growth.
Westerkirk Capital, a money manager for a single, undisclosed Canadian investor, will also own a minority interest, Fenway said.
“It is very clear to me that there are and will continue to be attractive opportunities for us to grow our business quickly through selective strategic acquisitions,” Tepper said in a statement. ” We have the capacity and the knowledge, we have the management team and the desire, and this deal will now give us access to Fenway’s capital, human resources and extensive network in transportation and logistics.”
The transaction is expected to close by the end of the year, pending review by Canadian regulators. ' Eric Kulisch