GLIL, the £500m (€570m) infrastructure investment joint venture between the Greater Manchester Pension Fund and the London Pensions Fund Authority (LPFA), has joined a consortium to fund rail fleets for Abellio East Anglia.
GLIL will provide around £45m of equity to the group alongside Standard Life’s SL Capital and RockRail, funding 58 trains with 387 carriages for the line and increasing rail capacity by up to 78% for Norfolk and Suffolk.
Senior debt is being provided by a group of UK and international institutional investors, together with the European Investment Bank, which separately said it provided €60m.
Long-term debt is coming from Legal & General Retirement (LGR) and LGIM clients.
Nicholas Bamber, head of private credit at LGIM Real Assets, said the deal was the first rail-related private debt investment for LGIM clients.
“There is a considerable need in the UK for new rolling stock to reduce overcrowding and improve train services, and our clients have a significant appetite to finance such assets,” he said.
Kerrigan Procter, managing director at LGR, said: “Transport infrastructure is a great investment for us, as the long-term income it produces helps to pay our customers’ pensions.”
LPFA chairman Merrick Cockell said the investment would give the local authority fund “strong levels of return” and provide “badly needed and upgraded trains for the region”.
“Many pension funds may struggle to invest in infrastructure,” he added.
“Our collaborative initiative has enabled us to share resources and expertise to provide access to opportunities harder to reach were we to go it alone. We look forward to building on this success and growing the venture.”
GMPF chair Kieran Quinn said: “This investment continues GLIL’s progress and success in acquiring highly prized assets at attractive rates of return while also supporting major UK infrastructure projects.
“Through GLIL, we are able to tailor our investments to better control risks and provide a return stream well suited to meeting our pension liabilities.
“Going forward, we anticipate growing GLIL and, in turn, our investment capacity as other LGPS funds join.”
Dominic Helmsley, head of SL Capital Infrastructure, said: “We also see further potential to provide competitive funding for new rolling stock across the UK rail network.”