Houlihan Lokey Advises Southwest Rail Industries

Houlihan Lokey is pleased to announce that Southwest Rail Industries, Inc. (SRI), a leading provider of railcar leasing services in the U.S., has been acquired by Sojitz Corporation (TSE:2768). The transaction closed on March 5, 2021.

Formed in 1998 from the spinoff of a rail leasing company founded by Bob Huette in 1981, SRI is a leading provider of fleet management services to the railcar industry. Based in Weimar, Texas, the company provides railcar leasing, brokerage, and maintenance services for its customers. SRI’s fleet includes more than 4,000 tank and covered hopper cars, all under long-term leases that provide significant revenue visibility. The company’s strength lies in its ability to provide lessees with quality customer service and the flexibility to tailor leases to fit customers’ needs. SRI’s railcars transport a variety of commodities such as liquefied petroleum gas (LPG), asphalt, solvents, lube oils, fine chemicals, fertilizers, and minerals for large, stable end markets. The company has successfully established a long-term, diversified customer base throughout the U.S. and Canada, including the greater Texas area as well as the Midwest and Northeast. SRI has continued to demonstrate consistent, sustained growth, with numerous future expansion and new customer acquisition opportunities.

Sojitz is a multinational, general trading corporation based in Tokyo. The company was formed in 2004 through the merger of Nissho Iwai Corporation and Nichimen Corporation. Today, Sojitz consists of approximately 430 subsidiaries and affiliates with wide-ranging general trading company operations in roughly 50 countries and regions across the globe. In the North American market, it aims to focus on rolling stock services and demonstrated this by recently acquiring a 100% ownership interest in Cad Railway Industries Ltd. (CadRI) in March 2020. CadRI is a Canadian company that provides maintenance, repair, and overhaul (MRO) services for freight cars, passenger cars, and locomotives across North America. SRI will become Sojitz’s third regional hub in North America, alongside CadRI’s two major facilities in Eastern and Western Canada, and the combination will increase Sojitz’s presence in the railcar leasing market by growing its existing tank and hopper car fleet as well as acquiring additional railcar types to service other industries.

Houlihan Lokey served as the exclusive financial advisor to SRI and assisted in marketing, structuring, and negotiating the transaction on its behalf. This transaction exemplifies the continued success of Houlihan Lokey’s dedicated coverage of the transportation and logistics and financial institutions sectors, to deliver an outstanding result to the selling shareholders.