Brightline/Virgin Trains

Part
01
of one
Part
01

Brightline Deals and Acquisitions

Brightline launched its railway line in Florida in May 2018. In September 2018, it purchased the rights to Xpress West, a proposed high-speed rail line between Las Vegas and Southern California. In April 2019, Virgin purchased a minority stake in Brightline and rebranded the company as Virgin Rail USA.

Brightline Acquisition of Xpress West — September 2018

  • In September 2018, Brightline, a privately owned and operated inter-city passenger rail system acquired Xpress West.
  • Xpress West had the rights to build a federally approved rail line from Las Vegas to Southern California.
  • Plans for the line included a 230-mile route connecting Las Vegas, through Palmdale and Victorville and ending with a connection to Los Angeles Metrolink service.
  • With planned speeds of 150 mph, the trip between Los Angeles and Las Vegas was expected to take about 80 minutes.
  • Ridership studies have shown that more than 50 million annual trips are taken between Southern California and Las Vegas.
  • The governor of Nevada stated that "The introduction of high-speed rail between Las Vegas to Southern California will bring significant economic and environmental benefits to our state and support increased tourism."
  • The terms of the acquisition were not disclosed.
  • Brightline planned to build and operate the rail line. The first phase of the project was expected to be built adjacent to Interstate 15 for 185 miles.

Brightline becomes Virgin Trains USA

  • In May 2018, Brightline kicked off its Express rail service from Miami to West Palm Beach.
  • In the fall of 2018, Wes Eden, co-founder of Fortress Investment and Richard Branson of Virgin Corporation decided to join forces and invest in high-speed rail in the US.
  • Virgin Group and Brightline then formed a strategic partnership to continue to grow high-speed intercity rail in the US.
  • Virgin Group made a minority investment in Brightline, which will continue to be managed and operated by the Brightline executive team.
  • Brightline intends to leverage the Virgin's brand and expertise in marketing for both current and future developments. The Virgin Group also has 21 years experience operating a high-speed intercity passenger rail system on the U's west coat.
  • At the time of the announcement, Brightline had rights to two lines, one from Miami to Orlando and one from Las Vegas to Los Angeles.
  • Virgin and Fortress had planned, through the corporation Virgin Rail USA, to issue an IPO for 28.3 million shares to raise $538 million.
  • According to Ben Porritt, SVP at Virgin Trains USA "As we explored a public offering, a number of alternative financing sources became available that allow us to keep the company private and meet our growth strategies."
  • In April 2019 Virgin Rail USA had a Grand Opening ceremony at its rebranded headquarters in Miami.

Research Strategy

To find out the financial terms of the deal, we began by looking through financial and railway media, including press releases by Brightline, Fortress Investment and Virgin. Consistently the articles said the terms of the deal were not disclosed, but we did find the majority owner of Brightline.

We then turned to Fortress Investment Group LLC, as the majority holders of Brightline. We searched their website for financial reports, but there was nothing listed after 2017. Finding that Fortress Investment was listed on the New York Stock Exchange, we turned to EDGAR, the SEC database, looking at any filings from six months before the sale to Virgin until the last filing. There was no information about the sale of shares to Virgin. We, therefore, concluded that the press reporting was correct, and the financial details were kept private.


Sources
Sources