Generation Capital to Sell Its Stake in UK Rail Company for £115 Million

The fund has signed a binding agreement to sell its entire holdings (10%) in the British rail company Porterbrook to CBRE. The deal is expected to yield a cash profit of approximately NIS 106 million. Over the holding period, the fund received cumulative dividends of about NIS 91 million. The transaction is part of the fund’s strategy to focus its activities on infrastructure and energy sectors in Israel.

Generation Capital announced today the signing of a binding agreement to sell its entire 10% stake in the British rail company Porterbrook to CBRE, a global investment management firm specializing in real estate and infrastructure. The transaction is valued at approximately £115 million, in line with the investment’s book value in the fund. The deal is expected to generate around NIS 500 million for the fund and deliver a cash profit of NIS 106 million. During the holding period, Generation Capital received cumulative dividends of NIS 91 million. The investment in Porterbrook was made in 2021 as part of a strategy combining solid, cash-generating assets with growth assets within the portfolio, at a time of low risk-free interest rates.

Porterbrook was established in 1994 as part of the privatization of the UK rail sector. The company operates in the rail leasing industry, owning a fleet of approximately 4,100 railcars, and is involved in purchasing, financing, leasing, and maintenance management of heavy rail equipment. According to the fund, Porterbrook is one of the leading companies in its sector in the UK. The fund noted that the investment was fully hedged against currency fluctuations between the pound and the shekel, ensuring that the proceeds and profits are not affected by exchange rate movements. The divestment is part of a broader strategy by Generation Capital, managed by Yosi Singer and Erez Balasha, to focus on value-add investments, with an emphasis on infrastructure and energy projects in Israel. Most of the proceeds are expected to be allocated to new core investments, alongside consideration of a special dividend distribution to shareholders.

The investment in Porterbrook generated an annual internal rate of return (IRR) of approximately 6% for the fund. Generation Capital’s stock has risen 60% since the beginning of the year.