PSP Investments Sells its Stake in Alpha Trains
Australia’s AMP Capital and Canada’s PSP Investments have agreed to sell their stakes in one of Europe’s largest train-leasing company for undisclosed sums to two Dutch pension firms.
In separate transactions, AMP Capital has agreed to sell its stake to APG – which already has an indirect interest in Alpha Trains – while PSP will sell its stake in the rolling stock leasing firm to PGGM, a Dutch pension fund service provider.
The transaction will make APG and PGGM’s Infrastructure Fund new shareholders in Alpha Trains.
Alpha Trains leases trains across 17 European countries with a fleet of 855 trains and locomotives, most of which are electric.
AMP and PSP have been investors in Alpha Trains since it was founded in 2008, since which the firm has doubled the the size of its fleet and increased EBITDA more than three-fold since 2012.
In recent years the firm has also expanded its operations into new countries. Spain, France and eastern Europe.
Adam Petrie, AMP’s head of transport and asset management for Europe, said, “Alongside our co-shareholders and management team, we are proud to have driven the development and growth of Alpha Trains from its inception to become the leading European rolling stock company.
“Throughout this time Alpha Trains has capitalised on the liberalisation of the European rail industry while delivering market-leading ESG performance.”
PSP Investments put out a detailed press release on this transaction:
Alpha Trains today announced that AMP Capital, on behalf of investors in its global infrastructure equity platform, has agreed to the sale of its stake in Alpha Trains to APG, which already owns an indirect interest in Alpha Trains. In a separate transaction, the Public Sector Pension Investment Board (PSP Investments), one of Canada’s largest pension investment managers, has also agreed to sell its stake in Alpha Trains to PGGM Infrastructure Fund.
Alpha Trains is one of the leading rolling stock companies in Europe, providing flexible leasing solutions to train and locomotive operators across 17 European countries. Its portfolio consists of approximately 855 trains and locomotives. The majority of its fleet is electric, positioning Alpha Trains as a leader of the clean energy transition in European rail.
Shaun Mills, Alpha Trains CEO, said: “Alpha Trains continues to be the leading Continental European rolling stock lessor and our resilience through 2020 highlights the strength of our business. I would like to thank AMP Capital and PSP Investments, our two exiting shareholders, for their support over the last 12 years and I look forward to working with our new shareholders, APG and PGGM Infrastructure Fund, alongside existing shareholder Arcus, to continue to grow and develop the Alpha Trains business.”
AMP Capital and PSP Investments have been investors in Alpha Trains since its establishment in 2008, supporting the business to achieve significant milestones, including:
- Doubling the size of the fleet and increasing EBITDA more than three-fold since 2012;
- Enhancing the resilience of the business by leveraging Alpha Trains’ competitive advantage in key passenger markets, pivoting to a circa 70% passenger / 30% freight asset portfolio;
- Expanding the operating footprint in existing and new geographies, such as Spain, France and Eastern Europe;
- Realising Alpha Trains’ commitment to sustainability and clean transport to not only consistently achieve a five-star GRESB rating since 2017, but also successively improving the score year-on-year as a Sector Leader; and
- Successfully concluding a complex refinancing to create a flexible and sustainable financing platform to support future growth and become the first ROSCO in Europe to develop and publish a Green Finance Framework fully aligned with the Green Bond and Green Loan Principles.
Adam Petrie, Head of Transport and Head of Asset Management, Europe, AMP Capital, said, “Alongside our co-shareholders and management team, we are proud to have driven the development and growth of Alpha Trains from its inception to become the leading European rolling stock company. Throughout this time Alpha Trains has capitalised on the liberalization of the European rail industry while delivering market leading ESG performance. Alpha Trains is a high-quality business with an important role in the future of European rail and we wish the business continued success.”
Arjan Reinders, Head of Infrastructure Europe, APG, commented: "Alpha Trains is an excellent business with a strong position in the Continental European rail market, together with an attractive and diversified portfolio of assets which generate long-term and resilient cashflows, which fits perfectly with the requirements of our pension funds clients. APG is making a strategic investment in the business, its management and its people, and we intend to further contribute to Alpha Trains’ success and growth over the long term."
Patrick Samson, Senior Managing Director and Global Head of Infrastructure Investments, PSP Investments, added: “Alpha Trains is a unique business with a solid foundation and strong leadership team. As the leading provider of flexible rail leasing solutions, we are proud to have supported and contributed to their growth and success alongside our partners. We are confident that PGGM Infrastructure Fund will be a positive addition to an already strong partnership – further supporting Alpha Trains’ potential.”
Erik van de Brake, Head of Infrastructure, PGGM: “Alpha Trains is a valuable addition to the growing PGGM Infrastructure Fund. We expect the company to continue its strong performance and generate long-term stable revenues for the fund’s participants, including Pensioenfonds Zorg en Welzijn, who are working towards a more sustainable investment portfolio. This investment enables long-term pension capital to support the growing demand for sustainable ways of transport in Europe.’’
Closing of the transactions are subject to approval by the relevant regulators.
So, why are PSP and AMP Capital selling their stakes in Alpha Trains to APG and PGGM Infrastructure Fund in the middle of a pandemic?
A few reasons which were outlined in the press release.
First, AMP Capital and PSP Investments have been investors in Alpha Trains since its establishment in 2008, supporting the business to achieve significant milestones, including doubling the size of the fleet and increasing EBITDA more than three-fold since 2012.
Moreover, they pivoted to a 70% passenger / 30% freight asset portfolio and expanded the operating footprint in existing and new geographies, such as Spain, France and Eastern Europe.
In other words, they realized significant gains on their value creation plan over the years and are selling this excellent asset to two top Dutch pensions, APG and PGGM.
The fact that Alpha Trains leases electric trains is an added bonus because both APG and PGGM Infrastructure Fund have an ESG mandate.
Did AMP and PSP sell their stakes in Alpha Trains at a deep discount because of the pandemic? I strongly doubt it, they're long term investors and so are APG and PGGM which will hold this asset for a decade, if not longer.
One year of revenue hit doesn't make a difference over the long run.
Also, keep in mind, this asset was part of AMP Capital's global infrastructure equity platform.
AMP Capital manages over US$16 billion in infrastructure, real estate, fixed income and other assets. It has a leading infrastructure fund with a truly global presence. It is one of Australia’s longest established managers of infrastructure investments with over 30 years experience.
In 2017, AMP Capital raised US$2.4 billion for its global infrastructure platform at final close, with more than 50 institutional investors committing to its global mandate to invest in high-quality assets offering the best relative value.
After many years, it's only normal it wanted to realize on its investment in Alpha Trains so it can move on to raise its next fund and buy other infrastructure assets.
In short, if the price is right, you can sell infrastructure assets, you don't need to keep them on your books forever.
All the stakeholders in this deal are gaining, especially Alpha Trains which now has two top Dutch pensions as its new owners. They will undoubtedly improve the business and expand its global footprint over the next decade.
That's all I can add on this deal at this time.
Earlier today, I reached out to Neil Cunningham and Patrick Samson but they "don't talk to the media", unless of course, it's to toot their own horn when it comes to promoting ESG disclosure and deflect attention from all the bad press they received on their Revera holding during the pandemic.
PSP knows me very well, I'm not a reporter, I'm a senior investment analyst doing my civic duty, blogging on pensions. The least they can do is give me a few minutes to chat about this and other deals.
The same goes for all of Canada's large pensions, I appreciate those of you who take the time to discuss deals in a little more detail with me and most of all, I appreciate your support.
Alright, let me end it there, if there's anything else to add, please reach out to me at LKolivakis@gmail.com.
Below, a nice clip showing you what Alpha Trains is all about. Great asset, it's almost too bad PSP Investments is selling its stake in it, but the time is right and I'm confident this will continue to be a great asset for APG and PGGM Infrastructure Fund.