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InfraBridge-backed ConGlobal working on potential sale

Logistics services company ConGlobal is working with Wells Fargo on a potential sale process for the operator of intermodal, finished vehicle, and depot service terminals, said four sources familiar with the matter.

The bank was hired several months ago, three of the sources said, but has not yet launched the auction as the company’s first move is to improve its earnings figures before soliciting potential buyers.

In October 2017, The Carlyle Group sold the business to Infrabridge Global Infrastructure Fund (GIF I) – then operating as AMP Capital’s infrastructure equity business – for roughly USD 500m, which represented a headline multiple of 10.5x based on approximately USD 48m in EBITDA, according to data compiled by Infralogic.

According to two of the sources, that figure has barely budged, to around USD 50m, due to difficulties with the industry’s business model. ConGlobal is largely divided into two businesses – one that operates and maintains storage depot yards for marine port containers and the other that operates and maintains terminal yards for the rail industry.

The rail yard O&M business lacks pricing power, affecting its ability to achieve greater earnings potential when it goes to renegotiate its two-to-three-year leases with the various rail companies, one of the sources noted.

The Fort Worth, Texas-headquartered company was one of InfraBridge’s first investments in the North American market.

Its peers include rail terminal management service provider Parsec and railroad service company Pacific Railway Enterprises.

A tie-up with one of its comps could provide a scale that would give a combined entity greater leeway in negotiating with the rail companies, the first source surmised.

The company also offers intermodal, auto, switching, depot and maintenance and repair operations across the US, Mexico and Costa Rica, according to its website.

ConGlobal, Wells Fargo and InfraBridge declined to comment.