The Grand Est Region acquires the TER trains circulating in its territory

As part of the opening up of passenger rail services to competition (subsequent to the French law for a new rail pact of 27 June 2018), the Grand Est Region, as the Public Transport Authority, has decided to acquire the TER trains circulating in its territory from SNCF Voyageurs.

To that end, the Grand Est Region has set up a local public company (société publique locale, SPL), Grand Est Mobilités, of which it is the main shareholder, to manage the trains of the Grand Est Region and finance the acquisition and maintenance of the TER fleet. The Region and the SPL have implemented a 42-year concession agreement to subsidise the costs of the SPL over the period in exchange for the payment of an amount corresponding to the book value of the trains.

In that context, SPL raised a structured financing of €1.2 billion, provided by a pool of lenders composed of the European Investment Bank (EIB), Caisse des Dépôts et Consignations (CDC), an institutional investor, and five commercial banks including the Crédit Agricole Group (the financing was provided by CACIB, the Alsace-Vosges Regional Bank, the Champagne-Bourgogne Regional Bank, the Lorraine Regional Bank and the Nord-Est Regional Bank).

CACIB played a leading role in structuring this transaction, acting in particular as:

• Arranger
• Hedging Bank
• Hedging Coordinator
• Facility and Security Agent
• Account Bank

As part of the opening up to competition of passenger transport in France, this is a strategic transaction for the Grand Est Region on several counts:

• it is the first French region to implement this type of structure to finance and manage its TER fleet, and the model will probably be reproduced by other regions,
• with transport accounting for one-third of the budget of French regions, setting up a financing structure enabling the region to meet its future expenses at a competitive cost is essential and ensures fairness between all rail operators.

By promoting public transport as an alternative to the use of cars, this transaction is part of the Group’s societal project and illustrates:

• the leading position of Crédit Agricole CIB’s Rail franchise in rail financing in Europe and France with this initial significant financing transaction as part of the opening up of the market to competition.  
• the Group’s ability to support innovative projects at the local level with the participation of the four Regional Banks with Crédit Agricole CIB: Alsace-Vosges, Champagne-Bourgogne, Lorraine and Nord-Est, onboarded from the start of the consultation by the midcaps division.
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