Financing mandate awarded for huge German rolling stock deal

Breaking News 7 December

Financing mandate awarded for huge German rolling stock deal

Two lenders have been selected to provide the financing for one of the largest rolling stock schemes in Germany after a highly competitive bidding process, sources said. 

Bavarian transport authority Bayerische Eisenbahngesellschaft (BEG) has appointed UniCredit and the European Investment Bank (EIB) as the two lenders for the S-Bahn Munich, a EUR 2.8bn project involving dozens of new electric trains for the 343km-long Bavarian rail network. 

The two lenders are targeting financial close in the second quarter of 2023, sources added. 

The EIB had initially allocated a proposed EUR 800m for the scheme in 2020, which was later increased to EUR 1.38bn, covering almost half of the project’s total capex. 

BEG’s tender involved the financing of 110 new vehicles for the S-Bahn Munich network, but one of the sources noted that the number of trains has been slightly reduced, while the debt package size has stayed intact. 

KPMG, which is advising BEG, has opted for the option of forfeiting financing, whereby the debt is structured as a purchase of 30-year receivables. 

BEG is acting as the arranger of the debt, which will be later provided to LHI Leasing, a German rolling stock lessor who won the leasing tender for S-Bahn Munich. 

BEG ran two separate processes for the financing and the leasing of the trains. 

Although forfeiting financing is thought to be better suited for German state-owned Landesbanks and the EIB, commercial bank UniCredit’s bid was successful. 

Sources said that most large German Landesbanks, including BayernLB and Helaba, looked into the project, while institutional investors also considered bidding for the scheme but pulled out. 

Institutional investors previously linked with the scheme include Allianz Global Investors, Talanx and MEAG. 

S-Bahn Munich has been in the making for many years before it was officially launched in 2020. The tender process took more than two years to reach preferred bidder stage due to the project’s complexity as well as the Covid-19 pandemic. 

The trains are due to be delivered between 2029 and 2032. 

UniCredit declined to comment. BEG and EIB did not respond to requests for comment.


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