RailAmerica , a short-line railroad operator, has the ability to make an acquisition in the range of $300 million to $400 million but few assets that big are on the market, so it is looking at smaller deals instead, its chief executive said.

“I would say there are probably only half a dozen assets out there in our industry that approach that size of acquisition,” RailAmerica CEO John Giles said in an interview.

RailAmerica has $190 million of cash on hand and is in talks with several parties, Giles said.

He said the company has the ability to get external financing as well.

Most of the larger assets are entrepreneurial or family-owned, and they take a cautious approach when trying to sell themselves, Giles said.

“It’s almost like they view them as their child,” he said. “And so there is caution, a very thoughtful and respectful manner in which they go about it.”

RailAmerica, which is owned by private equity funds managed by a unit of Fortress Investment Group , raised about $150 million when it went public in October 2008. “We are being very prudent and judicious with our newfound cash position. And do not want to chase after it unnecessarily and pay too much,” said Giles, who has been in the railroad industry for about 40 years.

Acquisitions are a key growth strategy for the company, which operates in a highly fragmented industry.

The North American short-line and regional railroad industry has about 550 such railroads operating on some 45,800 miles of track.

RailAmerica’s closest rival is Genesee & Wyoming, the only other listed regional and short-line operator.

Giles said the company, which owns about 8,000 miles of railroad, is looking for short-line railroads that can be incorporated into its platform.

RailAmerica has 39 railroads across the United States. It is present in 27 U.S. states and three Canadian provinces.

Giles said the company was not interested in acquisitions outside the United States and Canada.

RailAmerica reported a net loss for the fourth quarterand a 9 percent drop in revenue. The results include charges related to early debt retirement, interest rate swap termination and its recent IPO. (Reuters)