Dalmore, Equitix to resell $274 mn stake in UK rolling stock firm

A consortium of Dalmore Capital and Equitix Investment Management will sell down a stake in Cross London Trains (XLT) to three South Korean brokerage firms for 210 million pounds ($274 million), about two thirds of its ownership in the rolling stock leasing company.

The resale to Hana Financial Investment Co. Ltd., Mirae Asset Daewoo Co. Ltd. and Samsung Securities Co. Ltd. comes just after the consortium agreed to buy a 33.3% stake in XLT from 3i Infrastructure plc for 330 million pounds, according to investment banking sources on Feb. 22.

The Dalmore-Equitix group will invest 120 million pounds directly in the rolling stock lessor.

XLT leases 115 trains to the operator of the Thameslink passenger rail franchise. The railway runs through central London from Bedford, north of London, to Brighton on the south coast.

Hana Financial, Mirae Asset Daewoo and Samsung Securities plan to sell down their equity interests in XLT to domestic institutional investors in 20-year vehicles which are expected to yield about 7% per annum.

They had provided letters of commitment to Dalmore and Equitix to support the consortium’s bid for the stake.

The deal is subject to approval by other shareholders owning the remaining 66.6% and the UK government.

The remaining lease term for the 115 trains is around 20 years, which is widely expected to be extended.

In addition to the long rental period, revenues at XLT are likely to remain stable because of fixed charges paid by UK railway operators, regardless of changes in travel demand, the sources added.

Dalmore and Equitix have been luring South Korean institutional investors keen to raise exposure further to infrastructure in developed countries for stable yields.

Last month, their consortium sold down a stake in one of the UK’s largest infrastructure portfolios for 300 million pounds to 10-odd South Korean insurance companies.

daepun@hankyung.com

(Photo: Getty Images Bank)