Perella Weinberg Buys AIG Rail Services for $600 Million

Apr 19th, 2011 | By | Category: Business and Finance

An affiliate of the Asset Based Value strategy unit of financial services firm Perella Weinberg Partners has agreed to buy AIG Rail Services from insurer American International Group (AIG), the companies announced Monday. Financial details were not disclosed, but inside sources place the value of the transaction at $600 million.

The transaction will make Perella Weinberg Partners’ Asset Based Value strategy the ninth largest lessor of railcars in North America, owning over 10,000 railcars.

Perella Weinberg partner David Schiff said, “Today’s announcement reflects our ongoing commitment to pursuing compelling investment opportunities that generate cash flow. We continue to see long-term value in rail, and this transaction will allow us to expand our portfolio of rail-related assets, including railcars, chassis solutions and intermodal leasing. Rail remains the most efficient mode of transportation and we expect to benefit from the positive industry dynamics going forward.”

AIG Rail Services provides the railroad market with customized full service and net leases. AIG put its rail services and other non-core assets on sale last year to help pay off its $182 billion US government bailout.

To facilitate the transaction, the Asset Based Value strategy has formed a new entity to purchase and manage AIG Rail Services. This entity will convert into a limited liability company and continue operations under the name Flagship Rail Services LLC. AIG Rail Services President and CEO Eugene Henneberry will continue as of President and Chief Executive Officer of Flagship Rail Services.

“We are pleased to be joining forces with such an experienced team,” Henneberry said.

Pending approval, the transaction is expected to close in the second quarter of 2011.

Following the announcement, AIG shares on the New York Stock Exchange composite fell 85 cents to close at $32.61 Monday, a drop of 2.54 percent.

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