Rock Rail Consortium's £1 billion deal sets new high for institutional investment into UK rolling stock
20 June 2017
Financial Close has been reached on the £1 billion financing of new Bombardier trains for the new South Western franchise operators FirstGroup and MTR. The transaction was led by sponsor Rock Rail and partners SL Capital (part of Standard Life Investments) and GLIL Infrastructure LLP, who all provided the equity investment.
It is the latest success for the Rock Rail Consortium coming off the back of success in two previous major rolling stock deals last year. This latest deal represents the largest single UK rolling stock deal for which all senior debt is provided by institutional investors. The debt funding group is made up of UK, European and North American institutional investors with the advice in relation to debt composition provided by DC Advisory.
The core fleet will enter service from mid 2019 and consists of 90 new, state of the art 'AVENTRA' trains made up of 750 electric multiple unit vehicles to be built by UK manufacturer Bombardier Transportation. As well as offering a significantly enhanced passenger experience, increased capacity and reduced journey times on the Windsor, Reading and West London suburban routes serving Waterloo station, the 10-carriage formation trains included in the fleet are designed to match platform extension developments that are planned as part of the wider Waterloo and South West Upgrade programme.
Mark Swindell, Chief Executive Officer of Rock Rail said:
"In its largest deal to date, Rock Rail is delighted to have reached successful close on the £1 billion funding of this fleet of trains for First/MTR. Building on its previous rolling stock transaction structures, Rock Rail has secured broader and deeper funding from leading UK and overseas pension and insurance institutions who are directly investing in the U.K.'s long term economic infrastructure. The provision of this long term, highly competitive funding enables the delivery of significantly enhanced value for money to South Western rail passengers and the tax payer over the life of the trains, as well as stepped improvements in passenger, environmental and operational features."
Dominic Helmsley, Head of Infrastructure Equity at SL Capital said:
"This represents the third major investment in UK rolling stock through our exclusive partnership with Rock Rail and has established SL Capital as a major player in the funding of UK rolling stock. SL Capital's funding of this core fleet of trains will help deliver a major upgrade to the services running from London Waterloo station. We look forward to continued cooperation with all our partners to bring this rolling stock into service and to operate on the franchise. We continue to see further potential to provide competitive funding for new rolling stock across the UK rail network while offering highly desirable investment characteristics to our investors."
Daniel Hobson, Senior Investment Manager, Greater Manchester Pension Fund; Investment Committee Member, GLIL said:
"This project is an excellent example of how pension investors can work with the private sector to help build the future of the UK. We are heavily reliant on our rail infrastructure, and these upgrades will mean better passenger experience while at the same time helping to provide stable returns for the GLIL-affiliated pension funds up and down the UK."