Each month, freelance writer and asset
finance specialist Anthony O’Connor breaks
exclusive news and provides analysis about business in the European
rail finance sector. In his third report for Leasing Life
on this theme, he covers leasing to Stagecoach and developments in
the German market.

UK transport group Stagecoach is sounding out the market for a
£200m rolling stock financing package that could result in a deal
being awarded to banks or financial institutions outside of the
UK’s Rosco framework.

Stagecoach has appointed London-based asset finance adviser
Quasar Associates to generate interest from the banking and finance
markets for rolling stock finance for South West Trains valued at
between £200m and £500m, according to official European Union
tender documents.

“The estimate of £200m is the number that should be focused on,”
said Quasar director Jonathan Prince.

While the majority of banks and financiers are already signed up
to the Achilles Link-up rail industry procurement protocol, the
purpose of this market scoping is to attract any financial
institutions that have not yet joined the UK’s finance supply
system, said Prince.

“You can’t always spot the new banks until they join,” he said.
We are casting the net as wide as we can and we’ll see who comes
in.”

For a nominal processing fee, any new financial institutions
need to comply with the Achilles Link-up system, after which point
they are qualified to bid for rail industry financings.

The purpose of the financing package is to fund a number of
trainsets and for additional carriages to lengthen existing South
West Trains trainsets.

Stagecoach is said to be in advanced talks with manufacturers to
procure the additional rolling stock.

“We would certainly hope to close the transaction in the third
quarter or early in the fourth quarter,” said Prince.

According to the UK’s transport ministry (DfT), the indicative
number of additional vehicles required by South West Trains by 2014
is 104 electrical multiple units (EMUs).

Also, Stagecoach is bidding for the Southern rail franchise.
That franchise is expected to require 106 EMUs by 2014, according
to DfT figures.

With the ongoing Competition Commission investigation into the
financial efficacy of the three UK Roscos – Angel Trains, HSBC Rail
and Porterbrook Leasing – discussing any finance plans outside of
the Rosco framework would seem to be a taboo subject for rail
operators.

An official at South West Trains in London declined to detail
any ongoing finance plans. She stated that the current finance
scoping is a “normal process if you are bidding for a new
franchise”.

A spokesman for First Group even declined to field questions to
finance executives about future rolling stock finance for the
group’s train operating companies First Great Western,Transpennine
Express, First Capital Connect, First ScotRail and Hull Trains.

“If we were planning something cunning, why would we tell you
about it?” said the First Group spokesman, who confirmed he had not
previously been asked questions about upcoming rolling stock
finance.

A spokeswoman for Govia, the partnership between the Go-Ahead
Group and Keolis that operates the Southern and Southeastern rail
franchises, did not return successive calls on the subject of
rolling stock finance.

Earlier this year, Quasar Associates advised Transport for
London in relation to its financing of new rolling stock for the
London Overground.