Danish pension funds PKA and PenSam have invested DKK3.4bn (€460m) in UK rolling stock, buying the 30% stake in the public-private partnership (PPP) train operator Agility Trains East (ATE) from London-based listed developer John Laing.
The deal was carried out on behalf of the pension funds by AIP Management – the Copenhagen-based direct infrastructure investment platform they partly own.
As a result of the transaction, PKA and PenSam will own ATE alongside Japan’s Hitachi which holds the remaining 70% of the company, parties to the deal announced.
Michael Nellemann Pedersen, PKA CIO, said: “We are proud to be able to invest in such a significant infrastructure project that not only makes public transport more efficient, but also helps to replace old and inefficient diesel trains with new, predominantly electric trains on one of the UK’s most important lines.”
PKA said it accounted for 75% of the investment, with PenSam putting in the remaining 25%.
ATE has a rolling stock fleet of 65 new “state-of-the-art” Hitachi Class 800/801 Intercity Express trains running on the East Coast Main Line in the UK, according to AIP Management.
The fleet comprises both electric and bi-modal trains, the alternatives firm said, meaning it could operate on the electrified and non-electrified parts of the London-to-Scotland line.
ATE forms the second phase of the Intercity Express Programme (IEP), a £5.7bn UK rolling stock PPP to manufacture and maintain new Intercity Express trains for the Great Western Main Line and East Coast Main Line, in partnership with the UK Department for Transport, to replace the UK’s ageing fleet of Intercity trains, AIP Management said.
Claus Jørgensen, PenSam CIO, said he was very pleased with the strong collaboration between PenSam and PKA, which had ensured another solid investment in significant infrastructure.
Meanwhile, the seller John Laing, said the price paid for the 30% stake represented a strong uplift on its £333m (€365m) valuation of the holding as at 30 June 2020.
“We are delighted to have successfully completed the sale to AIP of this high-quality, availability-based asset at a strong uplift to book value,” said chief executive officer Ben Loomes.
At AIP Management, managing partner Kasper Hansen said he was very excited to announce the firm’s first rolling stock transaction, which he said added further diversification to the portfolio.
“This investment into ATE fits well with AIP’s investment strategy of generating long-term, stable returns for our investors while supporting the sustainable energy transition,” he said.
Back in April, PKA and PenSam made another infrastructure investment together via AIP Management, putting DKK1.7bn into two solar energy plants in California and Texas.
Separately, AIP Management was criticised by the Danish FSA earlier this week in the wake of inspections the supervisor had carried out, for certain failings over risks and valuation.
Focusing on a particular offshore wind farm investment, the FSA said AIP Management had not sufficiently included all new significant market information into the valuation, resulting in a risk that the figure did not adequately reflect current market prices and risk premia.
Noting another shortcoming, the watchdog also ordered AIP Management to identify the relevant risks to which the managed funds were or may be exposed, and to set risk limits for this.