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Parking-Transportation Fund III, LP (“PMF III” or the “Fund”) pursues investments in platform companies located throughout North America that operate and maintain (“O&M”) transportation-related assets that serve a diverse group of end-markets including, parking, aviation, maritime, rail, roads and ports (inland and sea).
Asset Light Investment Strategy: There are three fundamental demand drivers of PMF III’s “asset light” investment strategy in O&M-related businesses:
- Globalization & capacity constraints
- Global container trade more than doubled (2001-2011)
- Vehicle miles traveled (1980-2005) increased: auto (94%); truck (105%); highway lanes increased by only 3.5%
- Rail freight tonnage projected to double by 2035
- Decades-long under-investment
- 1 in 4 of nation’s bridges structurally deficient/functionally obsolete
- Annual roadway maintenance expenditure gap: $172 billion
- $6 - $8 billion per year in rail maintenance capital expenditures
- Federal, state & local budgets under pressure
- Increased private sector role
Outsourcing of Operations & Maintenance Functions: The need to stretch tax receipts and improve governmental efficiency is leading to a range of outsourcing opportunities. Examples include contracts for “fence to fence’ maintenance of state roads (fence to fence means everything between: grass-cutting; shoulder and surface repair and maintenance, re-surfacing and line striping); toll road collections; weigh station operation, and management of public conveniences and necessity such as parking garages and parks maintenance.
Investment Criteria: PMF III will seek to identify O&M operating companies in the above areas with the following characteristics:
- Platform companies with EBITDA typically between $5 million and $15 million;
- Control rights during the hold period and the ability to control the timing of exit;
- Strong management in-place or identified prior to closing;
- Opportunity for value creation by virtue of implementing operational improvements, scalability of systems and add-on acquisitions similar to the successful strategy employed with Impark;
- Consistent stable cash flow. At the center of this investment strategy is to find companies which, due to their market’s dynamic have a visible steady stream of recurring revenue that will lower volatility of the investment; and,
- Specialty niches within the above sub-sectors for O&M businesses. Businesses that supply specialty services to road and bridge construction; firms that provide transmodel services for container management; firms that specialize in roadway maintenance are just some examples of target end-markets.
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