(Releads, updates shares)
By Denny Thomas and Marc Roca
SYDNEY/LONDON, June 13 Royal Bank of Scotland
(RBS) (RBS.L) bolstered its finances on Friday with the sale of
UK leasing firm Angel Trains to a fund managed by Australia's
Babcock & Brown BNB.AX for $7 billion, including debt.
Babcock & Brown's European Infrastructure Fund, which is
leading the purchasing consortium, said the deal would be
unaffected by a plunge in shares of Babcock & Brown BNB.AX
amid concerns about its debt and ability to raise funds.
RBS is raising money to strengthen its balance sheet after
buying part of Dutch bank ABN AMRO last year and after
writedowns. Britain's second-biggest bank raised 12 billion
pounds ($23.5 billion) this week in the biggest ever rights
issue, and is also looking to sell its insurance business.
The Angel Trains sale price is slightly above the 3.5
billion tipped by some analysts and should boost RBS's capital
by 250 million to 300 million pounds.
By 1319 GMT RBS shares were up 3 percent at 236 pence,
helped also by Britain's financial watchdog saying it would
impose disclosure rules on short-selling. [ID:nL13231661]
"I believe it is one of the largest acquisitions in Europe
in the last few months and probably since the problems in the
credit markets started last summer," Babcock & Brown head of
European infrastructure Simon Gray told reporters on a
The consortium buying Angel Trains, which was selected as
preferred bidder in February, also includes Deutsche Bank
(DBKGn.DE), AMP Capital Investors and Australian superfunds
advised by Access Capital Advisers.
"The investment in the consortium is being made by Babcock &
Brown European Infrastructure Fund, an un-listed private fund
that is entirely separate from the Australian listed group, so
it's in no way affected by what is going on with Babcock and
Brown's share price in Sydney," Gray added.
UK, EU RAIL GROWTH
Angel Trains has more than 40 percent of the railway rolling
stock leasing market in Britain and more than 5,300 vehicles
across Europe. It was formed in 1994 from the privatisation of
The UK business is viewed as generating stable cashflow, and
has attracted interest from banks and infrastructure investors.
"The business has a very strong future due to the backdrop
of continued rail growth in the UK and explosive growth in
Europe," Gray said.
He highlighted that the UK Department of Transport (DoT) has
issued guidance on expanding rolling stock to cope with
overcrowding in some lines and that the European market is
opening up to private companies for both freight and passengers,
driven by the EU Open Access Directive.
Babcock & Brown, which traditionally has bought smaller
assets than its Australian rival Macquarie Group Ltd (MQG.AX),
already owns European train leasing company CB Rail.
Babcock buys global infrastructure assets, such as ports and
power plants and bundles them into funds to earn management
fees. It manages about A$72 billion in assets.
The company advised the consortium and also arranged long-
term financing of over 2.8 billion pounds, while RBS was advised
"Debt has been placed with a club of 17 lenders from around
the world," Gray said. "We bought in a large number of
institutions to eliminate the costs and uncertainties of
underwriting in the current marketplace."
(Additional reporting by Steve Slater and Mark Potter; Editing
by Louise Ireland)