• 12 jun 2023
  • Blog
  • Assetmanagement
Alpha Trains

Alpha Trains: from road to rail transport

Alpha Trains has the ambition to facilitate the transition from road to rail transport by offering modern passenger trains and locomotives, and sustainable financing solutions. PGGM's 28% stake in Alpha Trains fits perfectly with our strategy to expand investments in sustainable transport in Continental Europe.
Henry Chung

Henry Chung

Investment Director

Market leader in the transition to clean energy in rail 
'Many studies have shown that railways are more environmental friendly than planes, trucks, and even ships. The majority of Alpha Trains' 991 passenger trains and locomotives are electric, which contributes to lower CO₂ emissions for the European transport sector. With activities in 22 European countries, Alpha Trains is not only the market leader in leasing of passenger trains and freight locomotives in Continental Europe, but is also one of the important stakeholders in the transition to clean energy in the railway sector.' 
An interesting investment 
'For PGGM, the rolling stock leasing company is therefore an interesting investment with good financial returns, an acceptable risk profile and a positive impact. The investment helps us getting nearer our goal of having invested 25% of our capital according to the SDGs (United Nations Development Goals) by 2025. In addition, the business model is relatively straightforward and easily understandable. Alpha Trains owns and leases the rolling stock to passenger train operators and freight operators, who are solely responsible for rail operations. Therefore, Alpha Trains does not take any direct passenger and freight volume risk; as a result, COVID-19 had very limited impact on the financial results of Alpha Trains, and therefore on the return of our clients.' 
Liberalization and political support 
'To be able to facilitate the shift to rail and support the growing demand for sustainable transport in Europe, political support is crucial. This applies to liberalization of the railway market and solving infrastructural differences between countries. Consider, for example, differences in legislation and regulations, and energy and signaling systems. The European Union is in the process of harmonizing these, and wants to continue further liberalization of the railway sector. Competition increases quality and gives passengers/customers a choice, which makes it easier to switch to rail.’ 
The reason why Alpha Trains exists 
‘Liberalization means that there will be more private operators to enter into the rail market, and compete with the traditional national incumbents (e.g. SNCF, NS, Deutsche Bahn) in both passenger and freight segments. The problem is, private railway operators typically lack the capital to invest in trains and locomotives, and are therefore dependent on third parties for financing. That is why Alpha Trains exists: providing capital, leasing passenger trains and locomotives, and in some cases providing maintenance. This gives operators the flexibility to respond to opportunities that arise in the rail transport market.' 
'Even before we joined as a shareholder in 2021, Alpha Trains has been quite focused on sustainability. The rolling stock leasing company was the first private leasing company in the rail market to issue green bonds to finance its passenger trains and locomotives. In addition, in 2022, Alpha Trains has been awarded a GRESB* 5 Star Rating for the sixth time in a row, with the highest score of 100 for its commitment to sustainability. APG is also one of the shareholders of Alpha Trains. As Dutch pension funds, we are typically on the same page when it comes to company strategy, sustainability and energy transition topics. If there is new proven technology that is better and more sustainable, we will certainly invest in this. Just like we did in  the 31 sustainable battery-powered trains for the Berlin metropolitan region. At the moment, majority of the trains and locomotives are electric, and we hope this ratio will continue to increase further in coming decade, with new technology that can replace diesel-powered trains and locomotives in non-electrified rail networks.' 
* The GRESB Infrastructure benchmark is an assessment tool for providing insight into and comparing sustainability policy and activities through infrastructure investments and funds.

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