An investment prospectus to attract private funding for a project to build the world's first integrated testing facility for trains and rail infrastructure in south Wales has been launched. The Welsh Government's flagship Global Centre of Rail Excellence (GCRE) is inviting investors from around the world to take an equity stake in the business and support the next phase of the project's development.
The project has secured over £70m in public funding already committed and partially drawn down, with the Welsh Government committing £50m equity investment when the project launched in 2021. A further £20m grant is being provided by the Department for Business, Energy and Industrial Strategy, while Innovate UK has committed £7.4m for research and development.
Now GCRE Ltd, a special purpose vehicle company wholly owned by the Welsh Government, is seeking a joint venture partner (strategic investor) to play a lead role in the project’s implementation and further commercialisation. They could be a single investor or a consortium of investors, who will take a majority shareholding (minimum of 51%) and control of GCRE Ltd.
Read more: Freeport could create over 16,000 new jobs and £5.5 billion new investment
The proposed private funding for the project is £330m, 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 total estimated capital cost to deliver the project is around £400m including estimated capital required for assuring energy supply to the site.
This includes construction of a £250m railway, plus further phases of potential investment to build a new business technology park and hotel within the 700 hectare site located within the Powys and Neath Port Talbot local authorities.
Planning permission has been secured for the project with construction due to start in early 2023. Site clearance has already commenced.
Once completed by 2025, GCRE will have two - inner and outer - circular electrified testing tracks built on the site of the former Nant Helen opencast site and Onllwyn washery in the Dulais Valley. Other associated infrastructure will include dual-platform test environment, rolling stock storage, maintenance and sidings, as well as a control centre and space for related R&D, education and training purposes.
There aren't currently any testing facilities in the world that provide both a rail and rolling stock testing solution. The biggest current rolling stock testing facility in Europe is at Velim in the Czech Republic, with its high-speed loop.
However, the facility is in huge demand with waiting times of up to three years. With some live train testing on the exiting UK rail network, once operational the GCRE will free up some capacity for passenger and freight trains.
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.
Chief executive of GCRE Simon Jones said: “The Global Centre of Rail Excellence is one of the most important and creative rail infrastructure projects in rail today. As a purpose-built, integrated site for world class testing, research and development of rolling stock, infrastructure and new rail technologies, it will be a vital addition to the railway industry landscape, not just in the UK but across Europe.
"Our plan has always been to work with private sector partners to seek their investment and, importantly, their knowledge and skills in key areas such as rail and energy to realise the exciting GCRE vision as strategic partners. Both Welsh and UK governments recognise that as a commercial venture GCRE needs private sector support to be built and become established.
"With the launch of a procurement process this week we want to encourage partners from across the world to look at our project and to recognise the strong investment opportunity it represents.
"The GCRE project has attracted significant interest from right across the rail industry. Manufacturers and major parts of the rail supply chain see the chance to test and refine their products at a world class site, helping them to become more commercially successful and support the vital industry work needed to get to Net Zero. It’s this interest that helps make GCRE such a strong commercial proposition."
GCRE Ltd has been working with EY as financial adviser and Ashurst LLP as legal adviser to develop the procurement process, details of which have been published through a Prior Information Notice.
An event in London on December 7 will be held to discuss the opportunity ahead in more detail with potential strategic investors. The event will include presentations on the GCRE project with supporting speakers from Government and the wider industry.
Mr Jones said: "This investment opportunity is unique and we welcome interest from investment partners with experience in areas including rail infrastructure, energy and major projects.
“An important part of our work will be in energy. To ensure that we meet the power needs of our customers; deliver on our Net Zero ambitions and harness the commercial potential of our large site, we are also keen to talk to investment partners with experience of large energy systems with an appetite to invest in decarbonising the railway and supporting the work we are doing.
“This is an incredibly exciting opportunity to become part of a critical infrastructure project for rail, with a very strong commercial future. We’re looking forward to talking with those who share our vision and can help us make it a success.”
Read more:
- Port of Holyhead will submit formal bid for freeport status
- Gareth Bale takes ownership stake in Welsh whisky firm Penderyn
- Property professionals less positive about house prices in Wales survey shows
- Oil 4 Wales ends free one-off oil deliveries to elderly customers after high demand
- Construction starts on £12m sustainable office development in Carmarthenshire
