Wells Fargo Moves to Divest Rail Holdings

According to a recent announcement, Wells Fargo & Co has finalized a deal to divest its rolling stock leasing division to a new partnership formed by GATX Corp and Brookfield Infrastructure.

This joint venture will take over an impressive portfolio that includes operating leases for 105,000 various types of railcars,valued at $4.4 billion. Additionally, Brookfield will directly purchase finance leases for another 23,000 railcars along with 440 locomotives. GATX is set to oversee the management of both fleets.

“This move aligns perfectly with our strategy at wells Fargo to streamline operations and concentrate on core services that truly benefit our clients,” remarked David Marks, Executive Vice-President of Wells Fargo Commercial Banking on May 29.

The joint venture sees GATX holding a meaningful initial stake of 30%, with plans in place for potential full ownership down the line. Their first equity investment amounts to $400 million and will be sourced from regular operational cash flow and financing activities. Any future increases in their stake are also expected to come from standard capital investments. The assets involved are anticipated to remain stable within this partnership.

Apart from the contributions made by partners, major financial institutions including Wells Fargo Securities, BofA Securities, MUFG Bank, and Sumitomo Mitsui Banking Corp are backing this venture with a robust $3.2 billion five-year unsecured term loan alongside a $250 million unsecured revolving credit facility.

“This is an astounding chance for us to enhance GATX’s already strong presence in North America,” stated Robert C Lyons, President & CEO of GATX on May 29. “Our specialized knowledge in asset management and operations uniquely positions us for successful integration of this fleet while allowing us the financial versatility needed for ongoing growth.”

The completion of this transaction hinges on regulatory approvals but is projected to finalize by Q1 of 2026 or possibly sooner.

BofA Securities provided financial advisory services for both GATX and Brookfield Infrastructure while Mayer Brown acted as legal counsel for GATX; Skadden Arps served as legal advisors for Brookfield Infrastructure. Meanwhile, Wells Fargo had Simpson Thacher & Bartlett representing them legally during this process.