Oaktree Capital Invests $450 Million in Rail Transportation Firm Watco
Oaktree Capital Management is investing $450 million and forming a strategic partnership with Watco Cos., a privately owned company that provides a broad range of rail transportation services in North America and Australia.
Based in Pittsburg, Kan., Watco operates 41 short-line railroads and provides terminal switching, maintenance and repair; and rail car storage, rail and truck transloading services and supply chain management.
“We believe the U.S. transportation infrastructure sector is attractive for long-term investment and ownership,” Emmett McCann, co-manager of Oaktree’s transportation infrastructure investment portfolio strategy, said in a statement Jan. 4. “We view [Watco] as a tremendous transportation business, operating in the attractive freight-rail sector, with a phenomenal culture, the right values and exciting growth opportunities ahead of it.”
Oaktree manages $2.58 billion in infrastructure investments and included in its portfolio are stakes in Ports America, NorthStar Terminals, NorthStar Transloading and NGL Energy Partners.
Watco CEO Dan Smith said Oaktree’s investment will support the company’s improvement strategy and multiple customer growth initiatives.
“This partnership allows our Watco team to continue doing what we love to do — growing our business, delivering the best possible service and creating value for all to share,” Smith said.
Smith was promoted in July as part of a succession plan with former CEO Rick Webb assuming the role of executive chairman and four others being named to top executive positions, including Nick Coomes as chief operating officer, Stefan Loeb as chief commercial officer, Rachael Peterson as chief people officer and Ed McGuire as chief investment officer. It was Rick Webb’s father, Charles “Dick” Webb, who started the business in 1983 with the purchase of an industrial switching operation in DeRidder, La.
The company opened its first rail repair shop in Coffeyville, Kan., and purchased its first short-line railroad to run coal from Wyoming to power plants in the southern United States.
Greens Port Industrial Terminal in Houston. (Watco Cos.)
In 2009, Watco moved its first crude-by-rail train from Stanley, N.D., to Stroud, Okla. A year later, the company was awarded a long-term grain rail contract in western Australia and acquired full ownership of Greens Port Industrial Park along the Houston shipping channel, where it provides bulk storage and barge and vessel loading and unloading services.
Watco expanded into Mexico in 2017 through a partnership with the Kansas City Southern at the San Luis Potosi Terminal.
Watco and @Oaktree Capital Management are pleased to announce a new strategic partnership and agreement whereby Oaktree has committed $450 million of non-controlling equity capital to Watco. Media release: https://t.co/jZGfaWIDH9 pic.twitter.com/81XReh0CH8 — Watco Companies (@WatcoRail) January 4, 2019
Altogether, Watco operates 41 short-line railroads over 5,100 miles of track, plus 31 contract switching locations and 19 maintenance shops. The company provides terminal and port services in 89 locations.
Watco Supply Chain Services, a business that was launched in 2014, is based in Springdale, Ark., and provides truck and rail freight brokerage, warehousing and international shipping services. The company ranks No. 57 on the Transport Topics list of top freight brokerage firms and No. 103 on the TT list of top dry storage warehousing firms.