JSE-listed freight and logistics business Grindrod on Monday announced that its subsidiary, Grindrod Freight Services (GFS), had entered into a joint venture (JV) with the Pembani Remgro Infrastructure Fund (PRIF) to create a new company, GPR Leasing Africa, which would provide innovative and cost-effective leasing solutions to the African rail industry.

The new company that would be 55% owned by GFS and 45% owned by PRIF would be based in Mauritius.

“The JV company will be instrumental in providing funding options for customers looking to buy or operate wagons and locomotives manufactured or refurbished by Grindrod, as well as other original-equipment manufacturers,” GFS CEO Dave Rennie said.

Grindrod’s rail customers, which included mining companies, State railways and private rail operators, could now access operating lease solutions through GPR Leasing for main-line locomotives, shunting locomotives and wagons for the freight market.

Grindrod pointed out that up to 60% of rolling stock in the world’s developed rail markets was leased, explaining that GPR Leasing aimed to replicate this on the African continent through the JV as well as a similar entity targeting the local South African leasing market.

“Rolling stock leasing is a cost-effective option that opens doors to new opportunities throughout Africa for customers looking to keep debt off their balance sheets,” Grindrod said.

“We have been able to leverage the strong relationships of the stakeholders to access competitive funding. This translates to competitive lease rates for competitively priced locomotives. It is an exciting proposition.

“This transaction represents an integral part of PRIF’s strategy to be the infrastructure fund of choice for private companies looking for a partner with whom to invest in opportunities that have arisen as a result of Africa’s fast economic growth,” PRIF CEO Herc van Wyk said.

To date, GPR Leasing had already secured orders for 31 locomotives, all of which had either been built or refurbished by Grindrod.

“Grindrod locomotives are 30% to 50% cheaper upfront than other diesel-electric locomotives in the market. The proven record of the locomotives and their exceptional performance mean that funding institutions are keen to finance them,” Rennie stated.

Rand Merchant Bank had been appointed as the mandated lead arranger and funder of the debt package in support of GPR Leasing’s activities.