DC Advisory advised Ancala on the acquisition and financing of Hector Rail

Background

• Hector Rail is the largest private freight train owner and operator in Scandinavia, with a growing platform in Germany
• Founded in 2004 and headquartered in Stockholm, Hector Rail operates in a critical part of the rail freight value chain
  • The company provides traction service, i.e., locomotives and drivers to transport freight, as well as complementing services (mainly wagons and shunting)
  • Service offering focuses on block train provision to a range of blue-chip customers within various industries and intermodal services
• Hector Rail owns the majority of its modern and eco-friendly core fleet, most of which are modern electric locomotives
• The company primarily operates rail freight services in Sweden, Norway, and the Swedish-German rail freight corridor (through Denmark) with a growing domestic platform in Germany

Process

• DC Advisory (DC) provided M&A advice to Ancala throughout the acquisition process, including assistance with:
  
  • Process strategy and tactics,
  • Business plan review,
  • Financial modelling and valuation,
  • Due diligence coordination,
  • Advice on transaction documentation
• Following the successful signing of the acquisition, DC ran a comprehensive financing process, including:
  
  • Key marketing materials (such as management presentations, IM and RfPs)
  • Lenders’ due diligence
  • Debt structuring; and
  • Assisting in drafting and negotiations of full documentation
• A robust infrastructure financing package was completed for the company in December 2020

Outcome

• DC ensured the acquisition was successfully completed within a challenging timeframe
• In June 2020, Ancala had signed an agreement to acquire 100% of Hector Rail and completed the acquisition shortly thereafter
• Notwithstanding the difficult debt market conditions resulting from the Covid-19 pandemic, DC was able to deliver a successful financing outcome, and assist the company in raising debt from a group of leading European commercial lenders
• A capex facility was also successfully negotiated to support future growth of the business
• The refinancing will allow Hector Rail to continue to:
  • Strengthen its position as Sweden's leading independent green electric rail freight provider
  • Enhance their growing position in Germany; and
  • Support expansion of its existing fleet