Financial Close has been reached on the recently announced £400 million financing of new Hitachi trains for Abellio UK’s new East Midlands Railway. The transaction was led by Rock Rail and Japan Infrastructure Initiative (“JII”), and the fleet will be financed through Rock Rail East Midlands and leased to Abellio for the life of the franchise.
As with Rock Rail’s previous UK new rolling stock deals, senior debt is provided by UK and international institutional investors with the funder group comprising of Aberdeen Standard Investments, Aviva Investors (on behalf of Aviva Life & Pensions UK), Scottish Widows and Sun Life Investments.
The new state-of-the-art Hitachi intercity fleet will start operating in 2022, serving the main cities and towns on the Midland Main Line to and from London St Pancras. Based on bullet train technology, the 33 five-carriage units will offer significant passenger, operational and environmental benefits.
This latest deal is Rock Rail’s fourth new rolling stock deal, with all deals combined representing an investment by the institutional sector of £2.5bn in the UK railway and set to account for 10% of UK passenger rolling stock by the time all trains come into service.
For JII, this is the 3rd investment in the UK rail sector. JII continues to invest in the sector globally to support greener modes of transport.
Commenting on reaching Financial Close, Mark Swindell CEO Rock Rail, said:
“Rock Rail is delighted to be funding and leasing these world class trains which will bring a step change to the travelling experience for so many commuters. Our funders are leading pension and insurance institutions from both the UK and overseas who are directly investing in the UK’s long-term economic infrastructure. This long term, highly competitive funding enables significantly enhanced value for money to rail passengers over the life of the trains.
“We look forward to working closely with Abellio, Hitachi Rail, JII and all our partners to bring these trains into service and help transform rail travel across the East Midlands region.”
Naoki Nishida, President & CEO of JII, said:
“We are very pleased to team up with Rock Rail again on this landmark transaction. We look forward to working closely with all of our stakeholders, to ensure long-term success of the East Midlands Railway.”
Advisors for sponsors:
Burges Salmon LLP: Legal – Commercial documents
Clifford Chance LLP: Legal – Finance documents
DC Advisory: Financial advisor
Deloitte LLP: Tax
JCRA: Hedging advisor
Operis: Modelling advisory
SNC-Lavalin Rail and Transit: Technical and Commercial
Stevens & Bolton: Legal (Rock Rail)
Advisors for funders:
CMS Cameron McKenna Nabarro Olswang LLP: Legal
Deloitte LLP: Tax
Operis: Model auditor
SNC-Lavalin Rail and Transit: Technical and Commercial
Willis Towers Watson: Insurance
Rock Rail’s UK new rolling stock contracts
Financing of the Hitachi fleet for Abellio UK’s East Midlands Railway follows Rock Rail’s three previous new rolling stock deals. The first of these, in 2016, was for a fleet of 25 Siemens electric trains which started to enter service on Govia Thameslink Railway’s Great Northern routes in March 2019. The full fleet is due to be in operation before the end of the year. In 2017 Rock Rail secured financing for fleets on a further two UK rail franchises. The first of these saw Rock team up with Abellio and Stadler, providing financing for 58 new bi-mode and electric trains. The first Stadler bi-mode unit entered service on Greater Anglia’s Norwich to Great Yarmouth and Norwich to Lowestoft routes last month. Later the same year Rock joined with South Western and Bombardier Transportation in Rock’s biggest and first £1 billion transaction. It represented the largest ever unrated private placement delivered into the UK infrastructure market. This deal was for 90 new ‘AVENTRA’ electric trains to be built at Bombardier Transportation’s facilities in Derby.
