HSBC in talks to sell its UK trains for £1.7 billion
12 Jul 2010
An investor group comprising Morgan Stanley Infrastructure, 3i Infrastructure and Star Capital are in talks to buy HSBC Holdings' UK fleet of 4,000 trains for about £1.7 billion ($2.56 billion).
The Sunday Times today reported that HSBC is in exclusive talks with investment firms for selling its rolling stock leasing business of 4,000 trains.
In 1994, the UK government under the premiership of John Major privatised British Rail in a deal under which, several financial institutions invested by buying trains through rail-leasing firms which, in turn, sold them to make huge profits amidst widespread criticism that the government had been short-changed.
Of the nearly 14,000 trains in Britain, Porterbrook's fleet of 5,500 was acquired in 2008 by Antin Infrastructure Partners, a consortium of European bankers Deutsche Bank, Lloyds TSB and BNP Paribas for £1.4-billion from Spain's Banco Santander' UK subsidiary Abbey. (See: Banco Santander, HSBC's sale of train leasing arms expected to net £4 billion)
Although HSBC had also put its fleet of 4,000 trains for sale along with Santander in 2008, it was not able to get a good value due to the onset of the global recession. Abbey sold Porterbrook for £1.4-billion, the same price it paid for acquiring it in 2000 from UK transport operator Stagecoach Group.
HSBC Rail has more than 4,000, while 4,500 are owned by Angel Trains, which was sold by Royal Bank of Scotland in June to a consortium led by Australian investment bank Babcock & Brown for £3.6 billion.
HSBC's fleet includes the Intercity 225 trains that run between London and Edinburgh as well as the Javelin commuter trains that operate between Kent and London.
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