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FirstGroup is the UK’s leading public transport company1: its First Bus division serves two thirds of the UK’s 15 largest urban areas, carrying over 1 million passengers a day, and operating a fleet of over 4,500 buses.

In line with FirstGroup’s goal to become net-zero by 2050, the company is committed to achieving a zero-emission bus fleet by 2035. As part of this commitment, First Bus expect to have four fully electric depots and more than 600 zero-emission buses in the fleet by March 2024.

As part of this net-zero plan First Bus announced a partnership with Hitachi Europe in 2021, delivering a decarbonisation project at its flagship Caledonia depot in Glasgow in May 2022. The success of this project led to the establishment of a joint venture between FirstGroup and Hitachi to support further fleet transition.

New financing structure to accommodate specifics of EV buses

Seeking funding for 1,000 batteries to be operated in FirstGroup’s growing electric bus fleet, the joint venture between FirstGroup and Hitachi approached NatWest to participate in a standalone syndicated debt facility.

The transaction required an innovative structure to give FirstGroup and Hitachi the flexibility to manage the four-year period over which the bus batteries will come into service, their ongoing operation, and eventual replacement.

Based on these requirements, NatWest entered into a 12-year syndicated loan facility of £96 million to fund up to 1,000 bus batteries on a standalone basis, with the batteries then being leased to First Bus operating entities. NatWest also acted as Sole Hedge Coordinator for the associated interest rate swaps. 

And then, like buses…

Alongside the battery transaction, FirstGroup invited NatWest to participate in a separate three-bank syndicate Hire Purchase (HP) facility to finance the purchase of electric bus husks (being the chassis and drivetrain, excluding the battery). 

The HP facility totalled £150 million with NatWest providing a £50m commitment. The facility will be used to finance the husks (some with government grant funding – such as the ScotZeb scheme (Scottish Zero Emission Bus Challenge Fund) in Scotland and equivalent Zebra scheme (Zero Emission Bus Regional Areas Scheme) in England), with tenors of either 7 or 10 years depending on the specific requirement at the time each batch of husks is financed. 

NatWest committed to help finance the transition to net zero public transport

Ryan Mangold, Chief Financial Officer at FirstGroup, said: “Securing these facilities marks a major milestone on our journey to decarbonising our bus fleet, and in so doing, proactively supporting the transition towards net zero public transport. We thank the NatWest team for their expertise and their commitment to structure a debt package that meets our specific financing needs.” 

Simon Jenkins, Director, Transport Coverage at NatWest commented: “NatWest is delighted to be the only lender supporting First Group across both of these innovative debt facilities. By working in partnership with market leaders such as First Group, NatWest is delivering on our ambition to support the decarbonisation of commercial transportation in the UK and making tangible progress against our commitment of offering customers £100 billion in Climate and Sustainable Funding and Financing by the end of 2025 to help achieve net zero” 

Dominic Brindley, Director, Specialist Financing & Risk Solutions at NatWest commented: “We were selected as the sole hedge coordination bank for this transaction whereby all of the market risk was executed by NatWest with portions of the trade novated out to other counterparties. Our team worked closely with the sponsors and the financial advisor to establish an optimal hedging strategy given the uncertain drawdowns on the underlying debt. We were delighted to be awarded this role and we look forward to continuing to work with the joint venture2 on future drawdowns.”


Finance is subject to status. Security may be required. Product fees may apply.


1: Source: firstgroupplc.com

2. NextGen AssetCo: a 50:50 joint venture between FirstGroup plc and Hitachi Ltd (inc wholly owned subsidiaries Hitachi Europe Limited and Hitachi Rail Limited). NextGen AssetCo, will purchase the batteries which will then be leased to FirstGroup Energy Limited.



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