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Cargo Central Europe to bid for Hungary's MÁV Cargo

Deals

Rail World Inc., a US-based railway management and investment company specializing in privatizations and restructurings and Mid Europa Partners, a leading independent private equity investment firm focused on Central & Eastern Europe today announced the formation of a consortium to bid for 100% of MÁV Cargo Zrt, the spun off freight division of state-owned Hungarian railway company MÁV. 

The consortium of Rail World Inc. and Mid Europa Partners will be known as Cargo Central Europe. The bid that Cargo Central Europe is planning to submit will benefit from the industry expertise and management know-how of Rail World as one of the world's leading developers of railway operations. This combined with Mid Europa's financial strength and deep understanding of the CEE region will enable the consortium to grow and develop MÁV Cargo into an efficient and competitive regional rail freight operator providing a key transportation link between Western and Eastern European markets.

Discussing the consortium's plans regarding the privatisation of MÁV Cargo, Edward A. Burkhardt, president and CEO of Rail World said: “As the first state-owned company of its kind in Central Eastern Europe to undergo privatization, MÁV Cargo has a very good chance to gain considerable competitive advantage to lead and catalyze consolidation of the rail freight industry in the region. To that end Rail World will leverage the international best practices and experience it has accumulated over the years in such large scale projects as the privatization of four of the five British rail freight companies in 1995, the privatization of Estonian Railways in 2001 or the turnaround of Bangor & Aroostook railways in administration operating across the border of the US and Canada in 2003.”

Craig Butcher, partner at Mid Europa added: “The consortium values MÁV Cargo's assets and the business opportunity the company represents. If the bid is successful, Mid Europa will contribute to the further development of company with state-of the-art financing solutions and access to further capital under preferential terms. It is the consortium's aim to significantly grow the value of MÁV Cargo and perhaps in 3-5 years give local equity investors an asset to invest in through a potential stock exchange listing.”

The Cargo Central Europe consortium aims to retain the national identity of MÁV Cargo and keep the company's management function in domestic hands. It is the consortium's intent to cooperate closely with the local management and assist in their efforts to revitalize the formerly state owned company. If the bid is successful, the consortium is envisaging a range of opportunities to further improve the company's operational efficiency by enhancing customer service, remodeling the rolling stock and establishing strategic partnerships. According to the consortium's vision this will help significantly increase the rail freight the company handles domestically and abroad. (railway-market.pl)

Rail World Inc. is a Chicago-based railway management, consulting and investment company specializing in privatizations and restructurings. The company aims is to promote rail industry privatization by bringing together government bodies wishing to sell their stakes with investment capital and management skills. Under the leadership of President and CEO Edward A. Burkhardt Rail World has played an active role in railway privatizations in New Zealand, Great Britain, Australia, and Estonia and the development of open access operations of the Polish Railways. In addition to being involved in railway privatizations and acquisitions, Rail World also provides consulting services to large transportation companies. Rail World currently has operations in the United States, Canada, Poland and Estonia.
Mid Europa Partners is a leading independent private equity investment firm focused on Central and Eastern Europe with approximately €1.1 billion ($1.5 billion) of assets under management. Mid Europa Partners seeks to take controlling stakes in its investments either on its own or working alongside other financial or strategic partners. Mid Europa Partners typically invests in companies with enterprise values ranging from €200 million to €1 billion. The company employs an active, hands-on investment approach, applying the sector and regional knowledge and operating experience of its people to deliver long-term value creation alongside the management teams of is portfolio companies. To date Mid Europa has executed 19 deals in 14 countries in CEE.

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