Fundraising - JUNE 28, 2017

Legal & General backs new infrastructure funding deal with £100m

by Jody Barhanovich

Legal & General, a European institutional asset manager, is helping to finance a fleet of new Bombardier trains for the First MTR South Western Trains franchise.

The £100 million ($129.2 million) long-term debt investment by LGIM Real Assets, on behalf of clients including Legal & General Retirement, is part of a total £1 billion ($1.27 billion) commitment made from a group of institutional investors to Rock Rail.

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 U.K. manufacturer Bombardier Transportation. The trains are designed to accommodate planned, future infrastructure developments forming part of a wider investment program to improve services across the entire franchise.

The deal comes after U.K. train operators recently received £1 billion ($1.27 billion) in debt and equity financing from a consortium of pension funds and insurers in early June. The financial close was reached to finance new Bombardier trains for the new South Western franchise operators FirstGroup and MTR.

This deal represents the largest single U.K. rolling stock deal for which all senior debt is provided by institutional investors. It is also Legal & General’s second U.K. rolling stock deal following the backing of a new fleet of East Anglia trains last year.

“There is a real need in the United Kingdom to improve train services and reduce overcrowding; in return this will act as a stimulus for economic growth,” said Bill Hughes, head of LGIM Real Assets.

Legal & General has invested £8 billion ($10.3 billion) in U.K. infrastructure, direct investments and urban regeneration projects to date, and aims to invest £15 billion ($19.3 billion). Long-term capital is a good match for investment into new assets, providing income for pension funds and stimulating U.K. economic growth.

LGIM manages £902 billion ($1.16 trillion) in assets, providing products and solutions spanning all asset classes, and is actively investing and managing assets across commercial property, private residential, infrastructure, and property lending and, most recently, corporate credit.


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