Auxo Investment Partners in Grand Rapids Invests in the Rail Sector

Auxo Investment Partners, a private investment firm in Grand Rapids, announced it has acquired Genesis Rail Services, a full-service railroad maintenance company based in Bluefield, W.Va. and Roanoke, Va. Terms of the transaction were not disclosed.
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Auxo Investment Partners in Grand rapids announced it has acquired full service railroad maintenance company Genesis Rail Services. // Courtesy of Genesis Rail Services
Auxo Investment Partners in Grand rapids announced it has acquired full service railroad maintenance company Genesis Rail Services. // Courtesy of Genesis Rail Services

Auxo Investment Partners, a private investment firm in Grand Rapids, announced it has acquired Genesis Rail Services, a full-service railroad maintenance company based in Bluefield, W.Va. and Roanoke, Va. Terms of the transaction were not disclosed.

As part of the transaction, Cody Harman, son of company founder Jeff Harman, will retain a minority ownership stake in the company and continue his role running day-to-day operations. In addition, railroad industry veteran John McPherson will serve as Auxo’s operating partner and a board member.

“Given strong industry tailwinds and our company’s history of success, Auxo’s hands-on operational approach and impressive resources come at a perfect time,” says Cody Harman. “It was important to find a trustworthy partner who was extraordinarily knowledgeable about the railroad industry.

“With Auxo as a partner, our goal is to eventually provide maintenance of way and mechanical services to every Class I and Class II railroad in the country by growing and expanding our current offerings.”

Founded in 2009, Genesis Rail Services provides outsourced mission-critical maintenance of way (MOW), mechanical and construction services to Class 1, Class 2, and industrial railroads across the country.

Class 1 railroads are the largest railroad companies in the U.S., covering thousands of track miles that require routine maintenance and replacement, as well as derailment and yard services. Genesis recently introduced its flagship service, a tie plate distribution system which significantly reduces costs and improves uptime for operators.

This investment is Auxo’s first in the rail services industry, which is projected to grow significantly in the coming years. The increased freight volume, led by the growth of intermodal freight, is expected to cause additional wear-and-tear on tracks, leading to a higher demand for repair and maintenance.

“Market trends are moving in a direction that make Genesis’ value proposition all the more compelling as rail companies increasingly seek cost-effective solutions to their expanding maintenance needs,” says John McPherson, former executive for numerous large railroads including Las Vegas Railway Express.

“Having worked in the sector for more than 50 years, the company is in a unique position to scale its operations and serve the market in an unprecedented way.”

America has seven Class 1 railroads — defined as earning approximately $900 million or more in annual revenues — together have an estimated repair budget of $7.2 billion annually, according to Auxo. Genesis works with many of them, including Amtrak, Kansas City Southern, Canadian National, and more.

“Genesis’ strong industry relationships, growing suite of innovative service offerings, and customer-centric approach position the company for continued growth,” says Jeff Helminski, Auxo co-founder and managing partner.

“Especially as railways increasingly outsource maintenance of way services to more cost-effective third-party providers. The company’s growth trajectory is impressive, and it continues to add valuable new services and revenue streams that build on its history of industry- leading technology.”

Its flagship service was introduced in 2013, and since then the company has introduced several new services, including thermit welding, pile driving, derailment services, ballast cleaning, and traffic control.

Prior to its acquisition of Genesis Rail, Auxo has acquired 11 companies. It’s most recent was in August with the acquisition of Altus Industries Inc., a designer, manufacturer, assembler, and marketer of medical point-of-care workstations used across the health care industry.

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