Perspectives on Infrastructure: Investment opportunities in the UK

In this interview, Mark Swindell, CEO of Rock Rail, shares his views on the opportunities for private investment in rail infrastructure in the UK and Europe

03 November 2020
Mark Swindell, Rock Rail

Mark Swindell is Chief Executive Officer of investor developer Rock Rail, which he established in 2014 to develop innovative funding approaches to strategically important passenger rolling stock and other rail infrastructure. Prior to this, in 2011, he set up Rock Infrastructure, an independent greenfield developer providing structured solutions for large scale infrastructure projects across a range of sectors.

Outside of a swathe of innovative rolling stock deals, Swindell says he is looking at opportunities across other UK rail infrastructure as well as in Europe and beyond: “There is however a lot of uncertainty in the UK at the moment,” he says. “One of the wider issues here is the level of clarity over the role for private finance in essential infrastructure, and how and in which sectors this can best be delivered. The experience in the rolling stock market shows this can be achieved and deliver markedly better value for the public sector. The opportunity is to develop the right funding model for other areas of infrastructure including, for example, digital rail, working with government and other stakeholders. The government can make a real difference here by providing clarity on its aspirations for private investment; this will be key in supporting investors’ appetite, as well as by providing the vital seed capital to enable projects to be developed.”

The current shortage of development capital in the UK is compounded by that uncertainty and it will need government leadership to help unlock the potential from private investment.

Swindell says: “I would like the government to identify 10 or so priority projects. Then I would suggest it sets up a system to invite proposals from developers where public authorities, having looked at those proposals, can then actually say they would like a developer to take something forward. The local or regional authority could give the developer some funding support to develop a workable deal proposal within a certain amount of time, with the freedom to go with it at the end of the process.”

He points out that developers would need to guarantee competitive processes around the debt, equity, contractors and other providers.

“That kind of process would lead to a lot of innovation coming forward,” says Swindell. “The projects would need to be of a reasonable size – say £500 million to £1 billion – with a view to replacing PPP with a new form of private finance. The DfT’s newly established Acceleration Unit is well placed to play a key role in this process. With that new sense of direction, developers are then best placed to drive that innovation because they are focused on deliverability. Innovation can be a costly, complex and time-consuming business and it’s best done by greenfield developers.”

Rock Rail has transformed the UK rolling stock market with £3 billion of new rolling stock fleets since 2016, pioneering a new approach that has allowed long term institutional investors to invest directly into the sector. It is now implementing its transformative rail financing and procurement model into Continental Europe and beyond as well as broadening its applicability to digital rail infrastructure.

Swindell says: “The railways are one of the most important parts of our transport infrastructure, because they are sustainable, and sustainability is everything these days. Throughout the coronavirus pandemic and as we emerge from it railways have also proven their vital role for health, economic prosperity and wellbeing. The best way to get people in and out of cities is using trains, and in the longer term there are not going to be any other ways. I can see the City of London having no cars in 10 years’ time.”

That story is also attractive to institutional investors, he concludes: “Our investors want to invest in green and they want to invest in projects that help communities and are going to be around for a long time. Railways tick those boxes. But they will take risk on other infrastructure – they want an alternative investment class and they are ready to listen to new models. They just want that risk explained to them and properly managed.”

If you would like to find out more or have any questions, please contact Chris Simms, partner in our Infrastructure team.

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Perspectives on Infrastructure: Investment opportunities in the UK

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