A consortium of pension funds and insurers has provided £1bn (€1.13bn) in debt and equity financing for UK train operators.
The financing, which included equity from UK local authority pension funds and Standard Life’s infrastructure arm, will fund new Bombardier trains for FirstGroup and MTR.
Part of the equity is being provided by GLIL Infrastructure, the £1.27bn infrastructure joint venture set up by the Greater Manchester Pension Fund (GMPF) and the London Pensions Fund Authority (LPFA). Other members of GLIL are Merseyside Pension Fund, West Yorkshire Pension Fund and Lancashire County Pension Fund.
SL Capital, which manages infrastructure funds and is part of Standard Life, is also providing equity.
The transaction was led by Rock Rail, a company set up by former DLA Piper infrastructure head Mark Swindell to bid for large rail projects in the UK.
Debt financing was provided by Aviva Investors (on behalf of Aviva Life and Pensions UK), Barings, LGIM Real Assets (on behalf of Legal & General Assurance Society and other investors), MEAG Munich Ergo Asset Management, Rothesay Life, Scottish Widows, Standard Life Investments and Sun Life Assurance Company of Canada.
Rock Rail said the transaction is the largest single UK rolling stock deal where all senior debt has been provided by institutional investors.
It follows a similar deal last year by Rock Rail and the consortium involving train operator Abellio East Anglia.
Daniel Hobson, senior investment manager at GMPF and investment committee member of 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.”
As well as benefiting rail customers, the investment will help provide stable returns for the GLIL-affiliated pension funds across the UK, he said.
Dominic Helmsley, head of infrastructure equity at SL Capital, said: “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.”