The asset-based lending arm of alternative investment firm Perella Weinberg is moving in on the rail leasing business, another area that banks have recently exited. The firm is teaming up with Infinity Capital to invest $100 million in such transportation assets as railway cars in a joint venture via a corporation named Infinity Transportation. It is Infinity’s follow-up to a previous venture, Infinity Rail, which has accumulated about 7,000 railcars since its launch seven years ago and which closed in the first quarter of 2009.
As with the old fund, Infinity Transportation seeks steady income from the leasing of transportation equipment. The fund is managed by a five-person board of executives from New York-based Perella Weinberg and Atlanta-based Infinity. The board includes two executives from each firm and an independent director, but Perella’s capital will only be committed at the discretion of David Schiff, manager of Perella Weinberg’s $500 million Asset-Based Value Opportunity strategy. The fund expects to purchase $100 million in assets over the next 12 to 18 months.
“Over the last few years, a number of traditional players, including banks and financial institutions, have exited or are committing less capital to the rail leasing business,” says Schiff. Infinity Transportation will initially focus on purchasing older rail cars, which are selling cheaply enough to be profitable despite higher ongoing maintenance costs than what is required to care for newer, more expensive, railway cars. The strategy produces cash from leasing, while offering the opportunity to sell the cars or lever the investment. The fund also plans to invest in other transportation equipment, such as trucks, on an opportunistic basis. Perella Weinberg and Infinity could also theoretically sell their jointly-owned leasing company in its entirety or take the company public.
Schiff joined Perella Weinberg in early 2008, and the firm launched the Asset-Based Value Opportunity strategy in April of that year. Perella Weinberg Partners Asset Based Value Fund (onshore) earned 0.45% in its first partial year and gained 52.7% in 2009. The firm managed $5.5 billion as of December 2009.
--Josh Friedlander
