THE owner of Virgin’s Pendolino tilting trains has been put up for sale as investors cash in on booming demand for British rail assets.
Angel Trains, the rolling stock company that owns more than a third of Britain’s trains, is believed to have appointed the investment bank Citigroup to explore a sale. Royal Bank of Scotland sold Angel to a consortium of international investors in 2008 for £3.6bn.
Should the deal go through, Angel would be the third and final British train owner to be sold in a year, after Porterbrook and Eversholt changed hands in blockbuster deals.
Britain’s train-leasing giants were created two decades ago with the privatisation of British Rail. Eversholt, Porterbrook and Angel each received a third of the country’s rolling stock. They have earned hefty dividends for their owners and changed hands several times.
They are highly prized by international investors, from sovereign wealth funds to pension funds, for their predictable returns and the explosion in passenger numbers on the British rail system. Last month the government sold its 40% stake in Eurostar to a Quebec pension fund and Hermes Infrastructure for twice the amount expected.
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Angel is owned by investors from Britain, Australia, Canada and Luxembourg. Arcus Infrastructure is the biggest shareholder in a group comprising AMP Capital, PSP Investments, Whitehelm Capital and Amber Infrastructure. Angel was briefly owned by the Japanese investment bank Nomura, before being bought by RBS in 1997. It is based in London and Derby and has a fleet of more than 4,600 trains that it leases to all Britain’s franchise rail operators. Its assets include three-decade-old Great Western high-speed diesels, Pacer commuter trains that serve the Northern Rail franchise, and electric trains run by South West Trains.
Angel told owners of its bonds last week that its investors were considering “a possible sale of all or some of their interests”. Potential bidders could include Canada’s Borealis, the owner of the High Speed 1 Channel tunnel line, the Australian investors Macquarie and IFM, and Kuwait and Abu Dhabi’s sovereign wealth funds.
The Hong Kong billionaire Li Ka-shing underlined the attraction of British rolling stock when he bought Eversholt in January for £2.5bn, through his buyout vehicle Cheung Kong Infrastructure (CKI).
The owner of Northern Gas and Northumbrian Water had been expected to acquire only a controlling stake in the company, but instead tabled a knockout bid to acquire all the shares.
CKI was the runner-up in October’s auction of Porterbrook, a deal clinched by a consortium of international investors including the Australian asset manager Hastings, Canada’s Alberta Investment Management Corporation and EDF Invest of France. It is thought to have been sold for more than £2.5bn.