The European Investment Bank, the European Union's financing institution, is lending £110 million (ECU 170 million) towards the purchase of new passenger rolling stock for Inter-City, regional and commuter rail services in the United Kingdom. The European Investment Fund (EIF) is providing a £16 million (ECU 24 million) subordinated credit guarantee. The beneficiary will be Porterbrook Leasing Company Limited who is raising the first major financing for new rolling stock since the privatisation of the UK's railways. The total £363 million financing package will be provided by the EIB, UBS, SBC, the capital markets, and Porterbrook and will be partially guaranteed by the European Investment Fund.

EIB President and Chairman Sir Brian Unwin said: "This loan is part of EIB's ongoing contribution to modernising the UK railways, where it will help improve the services and reliability for a significant portion of the rail passenger market. It will also strengthen links with trans-European network routes and benefit the urban environment by improving commuter services. I am pleased that we are participating in this innovative securitisation and developing new sources of funding for rolling stock and infrastructure investment in the UK and Europe generally".

Chairman of the EIF's Executive Board, Gerbrand Hop said: "This transaction represents an important financing development, bringing together sources of private and public investment. As a European institution committed to supporting public-private partnerships for the development of trans-European networks, the EIF is pleased to be participating in this project alongside EIB, UBS, SBC Warburg and bond market investors."

Porterbrook, part of the Stagecoach Group, ordered the new passenger trains from ABB Daimler Benz Transportation (UK) (Adtranz) and GEC Alsthom during 1997 and 1998. It will lease the new rolling stock to six passenger train operating companies both replacing old sets and increasing capacity. The six TOCs are: Chiltern, Gatwick Express, LTS Rail, Midland Main Line, ScotRail and South West Trains.

The EIB, the European Union's long-term financing institution, was set up in 1958. It provides loan finance for capital investment furthering EU policy objectives. Owned by the EU Member States, the EIB raises its funds on capital markets. In 1997, the EIB lent a total of over ECU 26 billion, of which ECU 3.8 billion (£2.4 billion) in the UK. The President of the EIB, Sir Brian Unwin, assumed office in 1993 and is the first British President of the institution. The European Investment Fund (EIF) is a public-private partnership established in 1994 by the EIB, the European Community and private and public financial institutions from all 15 Member States. The EIF provides credit guarantees and credit enhancement for debt finance in two fields: Trans-European Networks, and small and medium sized enterprises (SMEs). The EIF's mission is to act as a catalyst in facilitating the partnership of private capital in TENs projects and in facilitating access for SMEs to loan finance at reasonable cost. It also participates as an investor in venture capital funds.