Hitachi gets new partner in UK East Coast train provider joint venture
John Laing Group selling 30% stake in programme to AIP Management for 421 million pounds
23 Sep 2020 | Michael Marray

UK infrastructure investor John Laing Group is selling its 30% interest in the InterCity Express Programme (IEP) Phase 2, bringing in a new investment partner for Hitachi, which owns 70% of the venture.

The UK Department for Transport started the Intercity Express Programme in 2005 to coordinate the replacement of its ageing high-speed train (HST) fleet. As train service provider, Agility Trains won the contract to deliver and maintain a fleet of Hitachi-made rolling stock. The contract covers 65 trains for the East Coast Mainline, and the construction and refurbishment of four depots. Hitachi Rail has a production line in northeast England, where its Class 800 trains are built.

John Laing Group has agreed to sell its stake to infrastructure investment platform AIP Management, on behalf of certain of its managed or advised funds, for a total cash consideration of 421 million pounds (US$545.9 million).

The deal will be completed in two stages, with the first stage including the sale of a 15% interest in IEP East, generating 203.4 million pounds along with a 7% per annum interest earned during the period between completion of the first and second stages, John Laing said in a statement.

Completion of the sale of the group's remaining 15% interest, which is not subject to any further conditions, will take place up to 12 months later at John Laing's election, and will generate additional consideration of 203.4 million pounds plus interest, calculated at a rate of 7% per annum, earned during the period between completion of the first and second stages of the transaction.  The consideration for the second stage of the transaction would be up to 217.6 million pounds. Completion of the first stage is expected shortly, following customary consents from the senior lenders to the project.

John Laing is an investor and active manager of infrastructure projects internationally. It creates value by investing in sustainable greenfield infrastructure projects and actively managing these projects through construction and into operation. 

Copenhagen-based AIP Management is a direct infrastructure investment platform for institutional investors. Originally established as PKA AIP in 2012, it has grown into an independent investment manager focused on advising institutional investors on direct investments into energy and infrastructure assets in Europe and the US. To date, AIP has invested more than 3.5 billion euros (US$4.12 billion) and aims to invest 800 million to 1 billion euros a year in the coming years.

Investors include the Danish pension funds PKA and Pensam. The PKA funds consist of four Danish funds administered by PKA A/S with approximately 40 billion euros in assets under management. Pensam is a Danish labour market pension fund managing occupational schemes in Danish municipalities, regions, and private companies. Pensam has approximately 417,000 members and 20 billion euros in assets under management.