Business / Corporate

Sumitomo Mitsui to buy U.S. rail car lease firm

Bloomberg

Sumitomo Mitsui Financial Group Inc. has agreed to buy railroad car-leasing company Flagship Rail Services LLC from a unit of Perella Weinberg Partners.

The transaction, valued at $1.1 billion, will probably be completed by the end of the month, pending regulatory approvals, according to a statement Thursday from Perella Weinberg Partners Asset Based Value Strategy.

Chicago-based Flagship Rail’s fleet has expanded by more than 50 percent since Perella Weinberg’s unit bought it in May 2011, according to the statement.

Sumitomo Mitsui’s lending unit will probably pay ¥30 billion ($291 million) to ¥50 billion for Flagship, a source with knowledge of the transaction said earlier, asking not to be identified because the terms are private. The bank didn’t disclose the price in a statement it issued earlier Thursday.

Japanese banks are diversifying their businesses and expanding abroad as the shrinking population and benchmark interest rates near zero constrain loan profitability at home. The takeover of Flagship follows Sumitomo Mitsui’s $7.3 billion purchase of Royal Bank of Scotland Group’s aviation division last year.

Sumitomo Mitsui Banking Corp. struck a deal to buy 40 percent of Indonesia’s PT Bank Tabungan Pensiunan Nasional for about $1.5 billion in May.

Mitsubishi UFJ Lease & Finance Co., an affiliate of Mitsubishi UFJ Financial Group Inc., bought Jackson Square Aviation LLC for about $1 billion in January to add about 70 planes to its commercial aircraft fleet. Mitsubishi UFJ also offered in July to buy a majority stake in Thailand’s Bank of Ayudhya for as much as $5.6 billion.

American International Group Inc. sold Flagship’s predecessor to New York-based Perella Weinberg in 2011 as part of the insurer’s efforts to raise cash after receiving a government bailout during the global financial crisis.