Singaporean sovereign wealth fund GIC has joined Canadian, Dutch and Abu Dhabi peers in Europe’s expansion of electric railways, a growth area that is backed by a modal shift to rail as a key enabler of the decarbonisation of supply chains.
GIC has acquired a majority stake in rail vehicle leasing company Railpool, after buying a further 27% from Germany-based co-owner Palladio Partners, a German specialist in the field of global infrastructure investments. The investment suggests the fund, with AUM estimated at US$690 billion, is pursuing infrastructure opportunities that are backed by strong energy transition-related tailwinds.
The Singaporean fund first invested in 2016, since when it has grown through acquisitions and market growth with its fleet more than doubling in seven years, reaching more than 400 electric locomotives and 148 passenger vehicles.
Ang Eng Seng, CIO of Infrastructure at GIC, said, “We expect growth in rail locomotive leasing to continue, driven in particular by ongoing replacement of owned locomotives with leased ones, and the shift from road to rail. We look forward to continuing to work closely with both Palladio Partners and Railpool’s management team to take the company to the next stage of growth.”
GIC’s fresh investment comes five months after OMERS raised its stake in Europe’s leading freight railcar lessor, VTG, from 27.5% to 33.3% in a clear move to bolster its strong position in European transport infrastructure. It is now an equal partner with the Abu Dhabi Investment Authority (ADIA) and Global Infrastructure Partners (GIP). ADIA and GIP announced in June 2022 their joint acquisition of a 72.5% stake in VTG for an enterprise value of EUR7 billion (US$7.5 billion). This implied OMERS spent EUR420 million (US$450 million) on upping its stake, which is now be worth around EUR2.3 billion (US$2.5 billion). VTG is an international asset owner and rail logistics company with around 88,500 railcars, the biggest privately-owned fleet in Europe. In addition to VTG, OMERS Infrastructure has 11 investments in Europe.
The previous weighty deal in railcar leasing was the takeover of VTG rival Alpha Trains in January 2021 by Dutch public pension funds APG and PGGM. APG ramped up its stake in the European regional train lessor to 62% after acquiring a 20.9% slice from AMP Capital while Canadian public pension fund PSP Investments sold its stake to PGGM. The Dutch funds dominate the shareholding of the owner of more than 950 mostly electric trains and locomotives with a total value of more than EUR3 billion (US$3.2 billion) across 21 countries, giving them exposure to the clean energy transition in European rail.
Arjan Reinders, Head of Infrastructure at APG, said at the time that the acquisition was made due to projected growth of the rail passenger and freight markets in Europe, along with the ongoing liberalisation of the European market that is set to drive further investment in the rail sectors.
Further back, in 2015 an AMP Capital-managed group of investors including Canada’s PSP, ADIA and PensionDanmark acquired a significant additional stake in Angel Trains, the UK’s largest rolling stock company, from Arcus European Infrastructure Fund 1.
Picture courtesy of Railpool