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July 1, 2010updated 23 Jun 2022 5:07pm

Non-Roscos making their mark in UK rail finance

For Close Leasing, which only recently entered the rail finance market, and at time of writing had not yet written any business, the aim is not to seek to be lead arrangers in train lease deals, but to become sub-participants in existing transactions. Close director Paul Bartley said: We understand the major banks, who take on the role of lead arranger for transactions ranging from say £100m 120m to £2bn, tend to have a hold limit where they retain a proportion of the debt themselves and sell down blocks of the balance to a range of sub-participant banks.

By Claire Hack

Lloyds is involved in large projects, including the Stansted Express programme

For Close Leasing, which only recently entered the rail finance market and, at the time of writing, had not yet written any business, the aim is not to seek to be lead arrangers in train lease deals (or Roscos, Rolling Stock Companies) but to become “sub-participants” in existing transactions.

Close director Paul Bartley said: “We understand the major banks, who take on the role of lead arranger for transactions ranging from say £100m [€120m] to £2bn, tend to have a hold limit where they retain a proportion of the debt themselves and sell down blocks of the balance to a range of sub-participant banks.

“We are looking to participate in some of those ‘sub-blocks’ they sell-off.”

Close seems to have recognised a gap in the market where syndicates of funders can be brought in to divide up business after the major banks decide how much of a deal they are able – or unable – to handle.

Bartley said: “We have got an aggressive growth strategy and it seemed a market worth looking into. We are liquid, we have got funds and we have the appetite.”

The company, based in Manchester and London, has taken on Tim Loy, a rail specialist formerly of National Australia Bank, to head up the new endeavour, and wants initially to write up to £250m.

Its primary focus will be on the UK passenger market with potential to extend this into European passenger and perhaps UK freight markets in the future, Bartley said.

While the company is still “finding its feet” in this market, negotiations are underway on a number of deals, although specific details could not be disclosed at time of writing.

Lloyds TSB is also a relative newcomer, having established a presence about two years ago. It is already involved with passenger and freight in the UK, the US and across Europe, where it operates through a subsidiary CB Rail, headquartered in Luxembourg.

It is also involved in the new Stansted Express programme – a project for which new rolling stock has already been ordered. Despite the prospect of cutbacks under the new government, it remains positive, according to Tim Durham, MD and head of rail finance at the banking giant.

Durham said: “So far, it is going well for us and we would very much like to do more.

“We like the rail industry. We are biased towards building a new portfolio and we have been asked to look at the options with regard to providing new rolling stock.”

Durham spent a decade at Angel Trains, arriving at Lloyds TSB to offer his expertise in rail finance and to help build a portfolio comprising 170 locomotives, 25,000 wagons, and investments in 100 trains across Europe.

“The outlook is positive as long as the government wants to carry on replacing rolling stock – if they suddenly say they want to make do with what they have, that would be a great shame,” he said.

CC rules Roscos restrict choice

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