KKR sold European Locomotive Leasing (ELL) at an Enterprise Value of about €1bn.

Infrastructure investments can deliver solid returns judging from private equity giant KKR’s sale of European Locomotive Leasing (ELL) last week. ELL is a leading provider of electric locomotive leasing solutions across Europe. A consortium of AXA Investment Managers – Real Assets, acting on behalf of its clients, and Crédit Agricole Assurances purchased ELL.

According to a report in Private Equity News, which quoted a person familiar with the matter, ELL’s sale at an EV of €1bn is equivalent to 19 times the company’s 2019 EBITDA.

Furthermore, KKR earned a return of five times, inclusive of dividends and exit proceeds.

A successful infrastructure investment

KKR Global Infrastructure Investors, which marked KKR’s first foray into infrastructure and raised in 2011/12, invested in ELL in 2014. Christoph Katzensteiner, the CEO and minority shareholder, founded Austria-based ELL that year.

The business plan envisaged the financing of only 50 electric locomotives. However, within five years, ELL had 150 locomotives on long-term leases across Continental Europe. Further, the success validated ELL’s original business premise that road transportation would shift to rail transportation on cost and ecological considerations. Versatile, electric locomotives could address this demand if presented with viable leasing options.

“KKR has provided consistent support to the ELL team, including through its dedicated Capital Markets team, which has led several rounds of financing for the company, each time expanding and enhancing the initial financing package put in place at the inception of the company in 2014,” said the announcement.

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