Auxo Investment Partners acquires Ferrovia Services

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Auxo will integrate Genesis Rail Services and Ferrovia Services into one platform, facilitating the cross-selling of services to improve offerings to existing customers. Courtesy Ferrovia

A local private equity firm is adding to its railroad maintenance platform with another acquisition.

Grand Rapids-based Auxo Investment Partners said Wednesday, Dec. 15, it acquired Ferrovia Services, an Auburn, Alabama-based provider of railroad and Department of Transportation (DOT) vegetation management services with locations across the U.S.

The addition follows Auxo’s recent purchase of Genesis Rail Services, a railroad maintenance company.

Founded in 1976, Ferrovia provides mission-critical and regulated vegetation management, inspection and abatement services to North America’s Class I railroads, as well as a variety of Class II, short line, industrial railroad customers, state DOTs and utility providers.

Company founder Jeff Welsh, CEO Allen Blythe and COO Ryan Cammack will retain a meaningful ownership stake, with Blythe and Cammack continuing in their existing roles and Welsh remaining in an advisory role.

Auxo will integrate Genesis Rail Services and Ferrovia Services into one platform, facilitating the cross-selling of services to improve offerings to existing customers. The railroad industry — driven by economic recovery, restocking conditions and a tight trucking market — is projected to see significant growth, particularly in the area of intermodal freight, leading to more wear-and-tear and increased demand for reliable and cost-effective rail maintenance.

“Auxo’s deep understanding of the rail industry, customer-first mindset, and philosophy of partnering with founder-led businesses to preserve their autonomy while accelerating next-level growth, really (sets it) apart,” Blythe said. “Our company has grown significantly for the past five years, and working with Auxo and Genesis will position us to move into other services while continuing to service our existing customers, affirming our commitment to innovation and expanding our vegetation management work to other railroads and DOTs.”

John McPherson, an Auxo operating partner and a board member of its rail industry platform, has held executive-level positions at some of the country’s largest railroads and advised Auxo on the Ferrovia and Genesis acquisitions.

“Given its complementary, but not overlapping, service offerings and customer base, Ferrovia will make an excellent fit alongside Genesis, as well as Auxo’s future acquisitions in the railroad maintenance sector,” McPherson said. “The culture that Allen has established at Ferrovia is something to be proud of. He knows the industry, how to satisfy the needs of customers, the chemistry between his people and, most importantly, how to run a growing and profitable business.”

A heightened focus on more sustainable forms of transportation is expected to drive an increase in rail volumes and, in turn, the need for ongoing maintenance of rail infrastructure. America’s seven Class I railroads, which are defined as railroads earning approximately $900 million or more in annual revenues, together have an estimated repair budget of $7.2 billion, a number that is expected to grow in the coming years.

Genesis Rail Services works with many rail companies in the Class I and Class II categories, including Kansas City Southern, Norfolk Southern, Canadian National, Amtrak and Florida East Coast Railway, among others. Over the past four years, the company has introduced several new services, including a patented tie plate distribution process, thermite welding, pile driving, derailment services, ballast cleaning and traffic control.

Combining Genesis’ maintenance-of-way capabilities with Ferrovia’s vegetation management offerings is a step toward building a nationwide platform to meet demand for a complete suite of maintenance and mechanical services, Auxo said.

“As railways continue to outsource mission-critical maintenance services to meet efficiency standards and targeted operating ratios, adding Ferrovia’s best-in-class vegetation management capabilities to Genesis Rail’s existing services creates a unique offering within the railroad industry,” said Jeff Helminski, Auxo co-founder and managing partner. “With Genesis and Ferrovia integrated into a single platform, their full-service offerings provide our customers with a highly capable, safety-focused and cost-effective track maintenance solution.”

Ferrovia’s proprietary and patented “Seeing Eye” technology uses cameras and controlled nozzles to apply herbicides to system-identified vegetation and surfaces. Spray trains and trucks equipped with the technology are designed to increase safety while improving track-time efficiency and herbicide use, resulting in sustainable outcomes for customers while providing full application data traceability.

“Ferrovia’s track record of investing in new technology and innovation complements our strategy to expand the platform’s service lines and solutions,” Helminski said.

Advisers and lenders on the transaction included Miller Johnson, Barnes & Thornburg, BDO USA LLP, Marsh & McLennan, Aon, Strategies Wealth Advisors, Krauter & Co., Thomas Brady & Associates, Miedema Appraisals, Mercantile Bank of Michigan and Graycliff Partners.

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