HSBC Sells Eversholt To Morgan Stanley, Star Capital, 3i

After lengthy negotiations, HSBC Holdings has agreed to sell U.K.-based train leasing business Eversholt to a consortium of infrastructure funds in a 2.1 billion pound ($3.39 billion) deal, Reuters reported. Morgan Stanley Infrastructure, 3i Infrastructure and Star Capital comprise the group buying Eversholt, which owns close to a third of Britain’s trains. HSBC bought Eversholt in 1997 for 726.5 million pounds.

(Reuters) – HSBC Holdings (HSBA.L) has inked a 2.1 billion pound ($3.39 billion) deal to sell its UK train leasing unit, which owns close to a third of Britain’s trains, to an infrastructure fund consortium. After protracted negotiations that started in the summer, HSBC agreed to sell Eversholt, its rolling stock business, to a consortium of Morgan Stanley (MS.N) Infrastructure, 3i Infrastructure (3IN.L) and Star Capital.

Eversholt is one of three UK train leasing companies originally created as part of the privatisation of the British Rail network 16 years ago. It was bought by HSBC in 1997 for 726.5 million pounds.

Banking sources had told Reuters HSBC was hoping to fetch at least 2 billion pounds from the sale. The 2.1 billion pound price tag is modestly above the carrying value at which Eversholt’s assets are stated in HSBC’s accounts, the bank said.

HSBC shares were up 3.6 percent by 1555 GMT.

“Eversholt’s strong market share, well-diversified customer base and high quality cash flows from leases contracted over the medium to long term make this an attractive asset with strong infrastructure characteristics,” 3i Infrastructure partner Neil King said in a statement.

Eversholt owns approximately 29 percent of the British rail fleet, with 19 fleets of rolling stock specifically designed and built for the UK rail network. The trains are leased long-term to seven train operating companies.

Banks are raising cash by selling assets not central to their businesses. In the last two years Royal Bank of Scotland (RBS.L) has sold its train leasing firm, Angel Trains, and Abbey — part of Santander (SAN.MC) — sold its British rolling stock firm Porterbrook. [ID:nL5696345]

The consortium said it would fund the acquisition through a combination of equity and debt and the transaction is expected to close by the end of 2010. Macquarie advised the infrastructure funds on the acquisition. ($1=.6198 Pound)

(Reporting by Quentin Webb, Greg Roumeliotis and Simon Meads; Editing by Hans Peters)