02 January 2019

Octopus Group is an alternative investment firm operating in tax-efficient investment, smaller company financing, renewable energy and healthcare, with an investment arm that has already invested billions in clean energy infrastructure. This summer it added clean transport to its portfolio, agreeing a first-of-its-kind deal with Heathrow Airport to create what will be the UK’s largest electric vehicle chauffeur fleet.

Burges Salmon has worked with Octopus over many years on a variety of clean energy projects, and helped make Octopus’s vision of ‘transport as a service’ a reality. This particular deal sees Octopus helping Heathrow and We Know Group (the operator of the fleet) simplify the process of going electric, by funding a fleet of up to 200 zero emission Jaguar I-Pace vehicles at the airport and charging the operating company on a pay-as-you-use basis.

Daniel Saunders, Investment Director at Octopus, says: 'This is a really significant deal for us because no one has done anything like this before. This is the first time vehicles and infrastructure have been funded under a mechanism related to customer utilisation.'

Octopus is financing the cost of the vehicles and then wrapping that up in a pounds-per-mile cost for the company that it believes is comparable or cheaper than running a petrol or diesel fleet.

Instead of charging a traditional interest rate on a corporate line of credit, the business model charges a cost-per-mile based on utilisation in order to repay the loan.

'Burges Salmon clearly has a great track record in transport and in energy,' says Daniel. 'They were open to drafting what is a relatively bespoke contract and making it sufficiently simplistic even though its components are quite technical.'

He adds: 'Graham Soar, Ed Hobbs, Alison Logan and Ross Fairley worked to get this done to a commercially critical deadline, and exhibited a level of patience that was exemplary – with these types of deals there are never completely solid foundations and things changed as we progressed. Their ability to understand the business model and challenge it when they felt something was wrong was extremely useful in getting this transaction across the line.'

As well as drafting complex and bespoke financing arrangements, the Burges Salmon team was also able to demonstrate its market-leading capabilities in the fast-moving electric vehicles sector.

Graham says: 'We have been talking to Octopus about various EV projects over the past few months, and this was the first one they got up and running. It required an in-depth understanding of what they were trying to achieve because when someone is doing something for the first time, they need you to be thinking alongside them to focus on their objectives and desired outcomes.

'Taking a concept from the drawing board and putting it into a business solution for a client, in a way that binds everyone and works for all the parties, requires a lot of thought and is extremely rewarding.'

Despite tougher emissions standards and stricter road charging for petrol and diesel fleets, plus falling costs and ultra-low running costs for electric vehicles, the upfront price of converting a fleet to electric can be daunting for many businesses. Octopus promises to not only simplify that process, including the financing of the vehicles and the charging infrastructure and any grid network reinforcement required, but to do so at a reasonable cost with a neat charging structure.

'This deal proves what can be done,' concludes Daniel, 'and it is absolutely replicable – we’re looking forward to rolling it out with more businesses going forward. The beauty of this proposition is that it can also be used for companies wishing to convert fleets to hydrogen or gas vehicles.'

Burges Salmon clearly has a great track record in transport and in energy.
Daniel Saunders, Investment Director at Octopus

Electric Vehicles

We offer expert insight into electric vehicle projects. Our team has award-winning energy expertise and deep knowledge of emerging transport technologies.
View expertise