RBS sells Angel Trains for £3.6bn

by Gill Montia

Story link: RBS sells Angel Trains for £3.6bn

Royal Bank of Scotland (RBS) has confirmed that it has sold its Angel Trains rolling-stock leasing business to a consortium headed by Babcock & Brown, for £3.6 billion.

Other members of the consortium include Deutsche Bank and AMP Capital Investors.

The sale forms part of a major fundraising programme that includes a successfully completed £12 billion rights issue and the auctioning of RBS’ insurance business which comprises Churchill, Direct Line and other brands.

The bank has needed to raise new capital because of losses relating to the credit crisis and its acquisition of Dutch bank, ABN Amro, last year.

The price achieved for Angel is slightly above expectations and RBS chief executive, Sir Fred Goodwin, has made it clear that he expects to achieve the full £7 billion asking price for the insurance business.

The price is viewed as ambitious by some because of the difficulty of securing funds for mergers and acquisitions in current market conditions and the highly competitive nature of UK motor insurance sector.

Completion of the sale of Angel Trains is expected before the end of the year and could add between £250 million and £300 million to the group’s 2008 profit.

Angel leases around 5,000 locomotives to passenger and freight operators in the UK and Europe.