AXA Investment Managers-Real Assets is making its first direct investment in UK infrastructure with the acquisition of a 15 percent stake in Agility Trains West from infrastructure developer John Laing for £230 million ($320.7 million; €259.6 million).
Established in 2012, Agility Trains works in partnership with the department for transport in developing the Intercity Express Programme to replace Britain’s ageing fleet of Intercity trains.
The programme is split into two components. The first, Agility Trains West, will provide 57 new trains to replace the Intercity 125 stock on the Great Western Main Line, running from London to Reading, Bristol, Cardiff and Swansea.
“We focus on underlying earnings and Agility Trains West falls squarely within our investment objectives,” said Mark Gilligan, head of infrastructure equity at AXA IM – Real Assets.
In addition to providing new intercity express trains, Hitachi – Agility Trains’ majority shareholder with 70 percent interest – will provide full maintenance services for the next 27.5 years under a government-backed usage guarantee. John Laing Infrastructure Fund will retain its 15 percent ownership interest a spokesman for the developer told Infrastructure Investor.
John Laing Group also owns 30 percent of Agility Trains East, the second phase of the Intercity Express Programme. Hitachi, which holds 70 percent in phase two as well, will provide 65 new trains on the East Coast Main Line from London to Doncaster, Leeds, York, Newcastle, Edinburgh and Inverness.
AXA IM- Real Assets’ investment comes nearly 18 months after it acquired a 42 percent stake in France’s A63 motorway operator alongside Crédit Agricole Assurances and is in line with a series of moves the firm has made in recent years as it focuses on expanding its infrastructure portfolio.
Gilligan joined AXA IM –Real Assets in October 2016 to build a dedicated infrastructure equity investment team to serve AXA insurance companies and third party clients. That team has now grown to six financiers across the firm’s London and Paris offices, Gilligan told Infrastructure Investor.
“AXA IM – Real Assets is currently focused on investing in western European core through core plus infrastructure across transportation, utilities and digital infrastructure,” Gilligan explained. “This is driven by its clients’ current preferences but these may expand over time.”
As at December 2017, AXA IM – Real Asset’s infrastructure debt and equity portfolio stood at €5 billion.
The firm is in the process of raising its debut infrastructure fund targeting €1.5 billion. According to Infrastructure Investor data, the firm has raised €900 million to date.