Rail Operations Group bought out by London-based investment house

Rail Operations Group has been sold to the London-based investment house STAR Capital. The deal will see STAR take a majority stake in the parent company Rail Operations (UK), which operates the rolling stock movement and storage businesses, and is planning to launch a new high-speed logistics and express freight service. The acquisition is being heralded as a vote of confidence in the development of the UK rail freight industry.
Three arms of the business are all in growing parts of the rail freight sector. As well as the established rolling stock movement business, the company also has its successful Traxion arm for storage and stabling. It is about to enter the fast-developing light goods and logistics market with its Orion brand – a high-speed version of the traditional dedicated parcels train. And last but not least, the business has just put pen to paper to take delivery of a fleet of thirty, tri-mode locomotives from Stadler, designated class 93.

Supporting specialist rail operations

STAR Is not a newcomer to the railway industry. The investment house has previous investment experience in rail-transport, notably for stakes in Eversholt Rail Group in the UK and Abellio GmbH in Germany. They say their involvement with Rail Operation (UK) will not only expand their own experience, but help with accelerating the modal shift from air and road to rail by offering fast, cost effective and environmentally-friendly solutions.

Rail Operations Group has been around for a while – but not as long as this veteran, which is still going strong (Rail Operations Group)

The investment house is planning to work closely with the operator. Paul Gough, a managing partner with STAR, said the firm matched all their expectations and aspirations. “We believe it exhibits several characteristics that STAR looks for in a platform investment, including a strong reputation as a high-quality, safety-conscious service provider, supporting critical rail operations across the UK. We are excited to partner with management to help the company continue to grow by providing innovative, cost-effective and increasingly environmentally-friendly solutions for its customers.”

Net-zero carbon targets

Commenting on the deal, Karl Watts, chief executive officer of Rail Operations (UK), said the company would throttle ahead. “The growth capital from STAR will enable the Group to widen its service offering and cement further its reputation as a high-quality, safety-focused solutions provider to our customers. We look forward to playing a significant part in assisting the UK to meeting its net-zero carbon targets.”

Part of that decarbonisation agenda will be answered by a deal concluded at the same time as the financial arrangements. The group have signed a framework agreement with manufacturer Stadler for the supply of thirty class 93 designated tri-mode locomotives. Delivery of the fleet begins with the first ten due in early 2023.

Class 93 tri-mode green credentials

The Class 93 tri-mode locomotives primarily move on overhead electric supply, but are also equipped with battery and an on-board diesel engine. The advanced locomotives will significantly reduce CO2 emissions for both rail freight and potentially passenger transport services.

The class 93 locomotive on order for Rail Operations Group draw electric power from overhead wires or batteries, and has a diesel back up too. (Stadler)

Watts says the motive power deal is a clear example of how the rail industry has acted very positively in understanding its role in reducing carbon emissions. “The class 93 fleet, with its array of green credentials, will allow us to lead the way in supporting the rail industry deliver its decarbonisation targets”, he says. “With its impressive state-of-the-art specification, the class 93s also allow us to develop new markets and modernise many aspects of UK train operations.”

Stadler, which will build the locomotives in Spain, has an eye on further commissions. Iñigo Parra, the CEO of Stadler Valencia, did a quick sales pitch.“The innovative and cost-effective solution will provide environmentally-friendly rail transport services, supporting national decarbonisation strategies and promoting modal shift to rail”. Stadler has been building up its manufacturing capacity in the past year, such as with further development at its site in Switzerland.

Author: Simon Walton

Simon Walton is RailFreight's UK correspondent.

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