Selection of an Investment Partner for the Global Centre of Rail Excellence

Description

This is an investment and commercialisation opportunity in relation to the Global Centre of Rail Excellence ("GCRE"), a planned railway infrastructure and rolling stock testing, proving, demonstration and storage facility in South Wales, on a site of 700 hectares located within the Powys and Neath Port Talbot local authorities. GCRE is being developed by GCRE Ltd, wholly owned by the Welsh Government. Through this procurement process, GCRE Ltd is seeking a joint venture partner ("Strategic Investor") to develop and fund GCRE to completion. The Strategic Investor will play a lead role in its successful and timely implementation, along with further commercialisation of the GCRE opportunity. The Strategic Investor could be a single investor or a consortium of investors, who will acquire a majority shareholding in and control of GCRE Ltd (being a minimum of 51%). The GCRE team will be holding an event in London on Wednesday 7 December 2022 to discuss the opportunity ahead in more detail with potential Strategic Investors. Those wishing to register for the event can do so here: https://directory.railbusinessdaily.com/gcre/ Lot 1: GCRE is a planned railway infrastructure and rolling stock testing, proving, demonstration and storage facilities in South Wales, on a 700 hectares site located within the Powys and Neath Port Talbot local authorities. For the rail industry and its supply chain, GCRE will provide a single site that brings people and ideas together, enabling world class research, testing and innovation. GCRE will be net zero in operation and will be the first purpose built large scale rail testing facility in the UK. The capital deployment needed will occur over a period of 3 years with the aim to achieve full commercial operations in FY25/26. Delivery will take place across different investment phases as described below: 1. Investment Phase 1: Ground works, site preparation, outline design and the development of storage facilities – this is already underway using public funding. 2. Investment Phase 2: Private funding needed for the development of the rail infrastructure, including construction of a rolling stock testing track (outer loop track length 6.9km), an infrastructure testing track (inner loop with track length of 4km), additional storage and maintenance facilities, and the required building and civil works to make the site fully operational, including: (a) assuring supply of cost effective, sustainable, and reliable energy to the site to support 24/7 operations; and (b) working with local stakeholders to get access to relevant utilities and access infrastructure. The delivery of Investment Phases 1 and 2 form the "Project". The total estimated capital cost to deliver the Project is c.GBP400m (including estimated capital required for assuring energy supply to the site). There is also an opportunity to commercially exploit and develop the renewable energy opportunities available at the site in line with GCRE's energy strategy, which includes development of a solar PV plant. The proposed funding for the Project includes: i) Public funding of GBP70m already committed and partially drawn down: Welsh Government equity investment of GBP50m and a GBP20m grant from the Department for Business, Energy and Industrial Strategy. ii) Private funding of c.GBP330m with part of the funding to be provided as equity by the Strategic Investor and part of the funding to be arranged by the Strategic Investor as debt to GCRE. The Strategic Investor selected through this procurement process will take majority ownership and control of GCRE Ltd, work alongside existing management and provide support necessary to achieve successful delivery of the Project. iii) Please note that this is a current estimate for the Project and work is underway to determine more precise value of the total capital cost. It should also be noted that site works (including award of the contract for earthworks), and relevant studies have already commenced. This opportunity would also involve development over the course of time of other commercial / revenue opportunities related to land / real estate development on the site. A more detailed description of the Project, its business plan and investment requirements will be provided at the tender stage of the procurement process. Transaction Definition: The Strategic Investor will play a lead role in the successful and timely implementation of the Project and further commercialisation of the GCRE opportunity. In addition, the Strategic Investor will be required to: i) provide additional support, management capability and expertise to support GCRE in the planning and delivery of the Project and achieve commercial operation. ii) demonstrate adequate relevant experience necessary to achieve the objectives of GCRE, including experience in matters such as: - rail operations and/or infrastructure; - development of complex greenfield projects including investment, management; and operations; - energy development (additional experience in this is preferred). iii) provide / arrange the required funding for the Project to completion c.GBP330m. Additional information: The contract value stated in this notice is an estimate only. Potential returns will depend on many commercial factors including (but not limited to) market conditions. Bidders should seek independent legal and commercial advice in relation to the potential value of the opportunity.