FirstGroup to add 1,000 zero-emission buses to fleet thanks to £150m finance deal

Image: FirstGroup

Transport operator FirstGroup is set to add 1,000 zero-emission buses to its UK fleet network after securing a £150m green finance facility, led by Lloyds Bank. 

Lloyds Bank was the sole owner coordinator and sole green finance coordinator, with NatWest and Bank of America acting as participants in the facility.

The Aberdeen-headquartered group is using the £150m hire purchase asset finance package to buy electric bus chassis and progress the development of making its fleet net zero. 

The move puts FirstGroup on track to reach its target of operating a zero-emission fleet by 2035. 

This is the transport operator’s latest move towards creating its zero-emissions fleet, following a joint venture with Hitachi in November 2023 to lease up to 1,000 electric bus batteries. 

NatWest agreed to join the 12-year syndicated loan facility of £96m to fund the bus batteries on a standalone basis, with the batteries then being leased to First Bus operating entities across the UK.

The latest funding also builds on a £300m syndicated sustainability-linked loan in 2021, for which Lloyds Bank was the joint ESG coordinator. 

It was structured in line with the LMA’s Sustainability-Linked Loan Principles, which set out best-practice guidance for the structuring of ESG-linked finance products and will see FirstGroup receive an interest rate adjustment based on meeting growth targets for its zero-emission bus fleet, and its ongoing reduction in combined scope 1, 2 and 3 emissions intensity.

To support the electrification of its fleet, the group is aiming to have four fully electric depots ready by March, in York, Norwich, Leicester and Hampshire.

FirstGroup operates more than 4,500 buses through First Bus - the regional bus operator delivered more than one million passenger journeys a day between 2022 and 2023.

Rod Pirie, group treasurer at FirstGroup, said: “Sustainability and transport decarbonisation are central to everything we’re trying to achieve here at FirstGroup. 

“The team at Lloyds Bank share the same commitment, and their ongoing support is a big boost in helping us to implement our plans and get closer to our net zero targets.”

Lloyds Bank’s green asset finance offers discounted funding for electric vehicles and energy-efficient equipment to support the net zero transition.

The funding was structured in line with the Loan Market Association’s Green Loan Principles.

Victoria Whitehead, head of infrastructure and transport at Lloyds Bank, added: “As a market leader, and with its coverage across the UK and Ireland, FirstGroup is perfectly placed to help drive greener transport across the UK and we’re proud to support them in their transition to net zero.” 

Simon Jenkins, director, transport coverage at NatWest, added: “We are excited to be able to play a part in decarbonising the bus market, employing our strong financing capabilities in transportation and the wider infrastructure sector to support a truly innovative financing solution. 

“NatWest remains committed to offering customers £100bnin Climate and Sustainable Funding and Financing by the end of 2025 to help achieve net zero.”

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