Legal & General backs new fleet of South Western Trains
28 Jun 2017
Legal & General is helping to finance a fleet of new Bombardier trains for the First MTR South Western Trains franchise.
The £100 million long term debt investment by LGIM Real Assets, on behalf of clients including Legal & General Retirement (LGR) is part of a total £1 billion commitment made from a group of institutional investors to Rock Rail.
This deal represents the largest single UK rolling stock deal for which all senior debt is provided by institutional investors. It is also Legal & General’s second UK rolling stock deal following the backing of a new fleet of East Anglia trains last year.
The core fleet will enter service from mid-2019 and will consist of 90 new trains, made up of 750 electrical multiple unit vehicles and built by UK manufacturer Bombardier Transportation. The trains are designed to accommodate planned, future infrastructure developments forming part of a wider investment programme to improve services across the entire franchise.
Legal & General has invested £8 billion in UK infrastructure, direct investments and urban regeneration projects to date, and aims to invest £15 billion. Long-term capital is a good match for investment into new assets, providing income for pension funds and stimulating UK economic growth.
Kerrigan Procter, Managing Director of LGR, said: “It is great to be involved in another deal where we can make a meaningful impact in helping modernise the UK’s railways. Transport infrastructure is a great investment for us as the long term income it produces helps to pay our customers’ pensions, as well as creating new jobs and driving economic growth - which is good for business and our customers.”
Bill Hughes, Head of LGIM Real Assets, said: “This deal further supports our holistic real assets strategy and demonstrates the deep cross sector expertise that we now have embedded across the platform. This is our second rail-related private debt investment for LGIM’s clients and further expands their exposure to essential infrastructure projects in the UK.
“There is a real need in the UK to improve train services and reduce overcrowding; in return this will act as a stimulus for economic growth. Our clients have a significant appetite to finance such assets which will offer them long-term, stable cash flows.”
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About LGIM Real Assets
LGIM Real Assets is a division of Legal & General Investment Management (LGIM), one of Europe’s largest institutional asset managers and a major global investor. LGIM manages £902bn in assets on behalf of over 3,200 clients (as at 31 December 2016), providing products and solutions spanning all asset classes. LGIM Real Assets, headed up by Bill Hughes, has AUM of £23.2bn (as at 31 December 2016), actively investing and managing assets across commercial property, private residential, infrastructure and property lending and, most recently, corporate credit.