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Article - July 18, 2023

Transportation Infrastructure: Diverse Opportunities, Powerful Tailwinds

Learn more about the Harris Williams professionals featured in this article.

Across economic cycles, businesses that combine earnings visibility, defensibility, and stable long-term demand are highly attractive to M&A investors. Companies within transportation infrastructure often exemplify these traits, presenting investors with significant potential to create value.

In recent years, Harris Williams has worked with several leading transportation infrastructure businesses, gaining an in-depth understanding of the most important differentiators and value drivers. Here, we share insights drawing from this experience.

Expanding Investor Interest

“Within the T&L space, we have traditionally seen infrastructure investors focus on asset-oriented companies such as rail or marine operators,” says Jason Bass. “Now, given recognition of the supply chain as a critical component of the global economy, we’re seeing more interest in a wider range of businesses across transportation modes.”

In particular, ports, port terminals, and nearby warehousing and transload capacity are gaining investor interest. In these areas, real estate strategy is critical to customer service levels and provides attractive barriers to entry from potential competitors. That supports revenue defensibility and resiliency, core themes in infrastructure services investing.

Joe Conner says the most attractive transportation infrastructure businesses can prove revenue resiliency across economic cycles and attractive returns on invested capital through efficient deployment of owned equipment. One example is Carolina Marine Terminal, a Harris Williams client that owns a marine port terminal and surrounding real estate. Its buyer is a joint venture between infrastructure investor Ridgewood Infrastructure and Savage, a global transportation and materials handling company.

Intermodal logistics is another area gaining visibility among investors due to growing container volumes, rising freight velocity, and the disruption caused by post-COVID-19 port congestion. Three Harris Williams clients serve as examples: STG Logistics, RoadOne IntermodaLogistics, and The Evans Network of Companies.

STG Logistics is a leading provider of container logistics and warehousing solutions at major ocean and airports throughout the U.S. STG Logistics saw infrastructure fund Oaktree Capital Management partner with Wind Point Partners to acquire XPO Logistics’ Intermodal Division, creating a port-centric provider of end-to-end domestic containerized logistics solutions.

“STG has a competitive advantage with the proximity of its facilities to the ports,” says Frank Mountcastle. “It has scale and the ability to tap into a network of flexible, multimodal capacity to move goods quickly and cost effectively through the supply chain. It also has a highly diversified customer base, serving customers in every industry.”

Conclusion

Harris Williams has worked with a wide variety of leading businesses in transportation infrastructure, from owners of ports to railcar services providers to specialists in intermodal logistics. While diverse in nature, all share elements of the earnings visibility, defensibility, and long-term demand investors seek. To learn more about opportunities in this exciting area, please contact our senior bankers.

Contacts

Harris-Williams Bio-Crop 0079 1118 JasonBass

Jason Bass

Group Head
Managing Director

Harris-Williams Bio-Crop 0101 0536 FrankMountcastle

Frank Mountcastle

Group Head
Managing Director

Harris-Williams Bio-Crop 0026 005 JoeConner

Joe Conner

Managing Director

Harris-Williams Bio-Crop 0065 1456 JeffKidd

Jeff Kidd

Managing Director