Angel Trains

An innovative securitisation combined with operational and management change 


Angel Trains was the largest of three UK passenger rolling stock leasing companies created in the privatisation of the UK railways.

Investment strategy 

Asset-Backed: Angel Trains owned around 3,600 electric and diesel railway engines and carriages, making it the largest passenger fleet in the UK at that time.

Requiring Fundamental Change: The incumbent management team at Angel Trains was predominantly engineering-focused. The organisation suffered from inefficiencies as a result of having been under public sector ownership, and operating expenses were unnecessarily high.

Creating value 

  1. Transforming strategy

    • Angel Trains' operational and finanacial performance was transformed by introducing a rigorous commercial approach to cost control, maintenance regimes and marketing.
  2. Strengthening management

    • The senior management team was changed and a comprehensive organisational and operational turnaround was effected, introducing cross-disciplinary teams with improved commercial capability and achieving substantial reductions in maintenance expenditure.
  3. Developing through capital expenditure

    • Angel Trains was repositioned as a customer-focused and commercial enterprise with an emphasis on value-added refurbishment and new rolling stock in order to enhance revenues.
  4. Lowering the cost of capital to create extra upside

    • A substantial portion of the future lease payments was government-guaranteed and was immediately securitised to reduce the required investment. Due to the importance of the rail network, the remaining portion of the lease payments was identified as extremely reliable too and a second securitisation soon followed, thereby lowering the business’s cost of capital.
    • This was the first time that securitisation had been used to finance (as opposed to subsequently re-finance) an acquisition in the UK.

Status of Investment: Terra Firma’s investment in Angel Trains has been fully realised, having been repaid within three months from the proceeds of the second securitisation. Terra Firma sold its equity position to a financial buyer in December 1997.

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engines and carriages


lessees of the fleet