European Locomotive Leasing wins support from KKR as Siemens’ Vectrons get initial sign up

KKR, the global investment firm, has announced that it will financially support the development of European Locomotive Leasing (ELL) a full-service locomotive leasing provider to freight and passenger operators throughout continental Europe.

ELL is led by a team of experienced rail professionals based in Austria and Germany. On Monday, the company announced signing a framework contract for the order of as many as 50 state-of-the-art Siemens Vectron locomotives. The first locomotives are bindingly ordered and will be delivered immediately.

The additional locomotives will be delivered from 2014 through 2016 and will allow ELL to satisfy the demand from its expanding customer base.

The locomotive leasing sector in Europe benefits from highly attractive market dynamics that ELL is well placed to capitalize on. These include rail traffic liberalization and promotion across the continent, the growing prominence of private rail operators more likely to favour leasing rather than owning locomotives, and an improving macroeconomic outlook.

Johannes Huth, Head of KKR Europe, said: “We view the full-service locomotive leasing market as attractive to a new entrant with the right long-term capital structure, management team and fleet of high-performance and environmentally friendly locomotives. We look forward to partnering with the ELL management team to support the development of an infrastructure area that is critical for the growth of the continental European economy.”

Jesús Olmos, Head of KKR Infrastructure in Europe, added: “Today’s announcement represents another exciting step in the growth and diversification of our infrastructure platform in Europe, following earlier investments in onshore wind, solar, water, district heating and parkings.”

Christoph Katzensteiner, CEO of ELL, said: “The modern and versatile Vectron locomotives are particularly well suited to the European market and are proving to be very popular with our lessees. In particular, we are pleased about their built‐in European Train Control System (ETCS), which allows seamless domestic and cross‐border traffic. This order exemplifies ELL’s mission of providing customers with a full‐service package of best‐in‐class technical performance and operational support.”

KKR is making the investment from its global infrastructure fund. As of March 2014, the firm has made 11 infrastructure investments in Europe and North America

ELL (Vienna, Austria and Munich, Germany) is a rolling stock company that purchases locomotives – the railway vehicles that provide the motive power for trains – and leases them to freight and passenger operators throughout continental Europe.

Katzensteiner added: “ELL provides a full-service package to its customers, including locomotive maintenance and management services. ELL’s fleet is composed of economical, safe and environmentally sound electric locomotives fully equipped with the latest European Train Control System, enabling its customers to use ETCS rail tracks along the continent’s major rail corridors.

Founded in 1976 and led by Henry Kravis and George Roberts, KKR is a leading global investment firm with $94.3 billion in assets under management as of December 31, 2013.

The Vectron locomotives will have a maximum rating of 6•4 MW, and a maximum speed of 160 km/h. The AC locomotives will be equipped for cross-border operation in Austria, Germany and Hungary, while the multi-system locos will also be equipped for Poland, the Czech Republic and Slovakia. In addition to national train control systems, the locomotive will be equipped with ETCS.