Financial services giant Legal & General has provided £200m for new rail rolling stock on the south Wales Metro.
The deal will see new rolling stock being bought and pressed into service on the Core Valley Lines in south Wales, which are being mostly electrified.
It will provide for a mixture of 60 tram-trains, which will be able to switch between electric and battery power where there are no overhead electrified lines, and trimode trains.
The trimodes will be able to switch between electric, diesel and battery modes - on the partially electrified Rhymney and Vale of Glamorgan Lines.
The funding will provide:
- 36 x three car trams-trains.
- 17 x 4 car trimodes.
- 7 x 3 car timodes.
The new Wales and Borders rail franchise is being operated by KeolisAmey, which will also carry out electrification of the Core Valley Lines.
The contracts were awarded last year by the Welsh Government's at arm's length transport body, Transport for Wales.
The new franchise is operated under the Transport for Wales Rail Services banner.
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The Welsh Government did explore funding new rolling stock itself and then striking a leasing deal with operator KeolisAmey.
The repayment term and interest rate on the L&G funding has not been revealed, but provides a more cost effective funding solution than if the Welsh Government had sought to finance the cost of new rolling stock itself.
The new fleet is scheduled to be operational in 2024.
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The deal, through a rolling stock special purpose vehicle, marks L&G's fifth investment in the UK rail industry.
Other investments in Wales include Aston Martin's new luxury car factory at St Athan, in the Vale of Glamorgan, and £450m to help finance the Central Square scheme in the centre of Cardiff.
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assets, L&G Retirement, said: “We are very pleased to have helped finance new rolling stock in Wales, as part of our continued investment in UK railway provision and Welsh infrastructure.
"This investment complements our previous activity in the regeneration of key parts of Cardiff, including the area around the train station.
“We are committed to our investments in infrastructure in the UK, particularly where they play such an important part in people’s daily lives and can help bring people, businesses and communities together.”
However, work on the £738m Core Valley Lines project, which includes provision for VAT and a significant overspend, is dependent on the UK Government agreeing to transfer the rail asset over to the Welsh Government.
Last month the Welsh Government's Minister for Transport, Ken Skates, said a preoccupation with Brexit within UK Government, could jeopardise the electrification programme.
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In a letter to the UK Government's Transport Minister, Chris Grayling, Mr Skates said: "The transfer is due to complete by September 20th, 2019 and subject to a satisfactory business case, appropriate funding terms for the transfer and agreement by the Secretary of State for Transport in June 2019, we remain on course to meet this schedule.
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"However, I have been made aware in recent days that the increased prospects of a ‘no deal’ Brexit now threaten this asset transfer process, with potentially far reaching impacts for the wider delivery of the South Wales Metro project.
"As a result of the need to handle a ‘no deal’ Brexit in Whitehall, it is likely that resources within the Department for Transport will be moved from ongoing business within the department and on to other duties.
Mr Skates said that while resources continue to be allocated to this work within the Welsh Government, any reduction in the resources and capacity available within the UK Government to support the asset transfer "puts not only the transfer programme at risk, but also jeopardises the deliverability of the south Wales Metro as contractually programmed."
A Department for Transport spokesperson said: “We have been working closely with the Welsh Government on the divestment of the Core Valley Lines and we remain on track for the Secretary of State to reach a final decision later this year.”
