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21 Nov 2023

Stephenson Harwood advises Hitachi and FirstGroup on strategic decarbonisation partnership for electric bus batteries

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Stephenson Harwood has advised newly-formed NextGen AssetCo Limited (“NextGen”), a 50:50 joint venture vehicle established by Hitachi Rail Limited and FirstGroup plc ("FirstGroup”), on arrangements for the purchase and leasing of up to 1,000 electric bus batteries valued at c.£100 million.

NextGen has committed to purchasing batteries and leasing them to First Bus over an initial eight-year period (with the option for a two-year extension) on an operating lease basis, to support FirstGroup's bus fleet decarbonisation programme. Hitachi research estimates that replacing 1,500 diesel buses with electric buses could save c.84,000 tCO2e a year. The deal will be funded by a combination of debt and equity, with Hitachi and FirstGroup having committed a cash investment of £10 million each into NextGen.

Stephenson Harwood advised NextGen across all areas of the transaction including the joint venture and equity arrangements between Hitachi and FirstGroup, the operational and leasing elements, and the debt financing arrangements.

"It has been fantastic to see this strategic partnership between Hitachi and First become a success," Jonathan Cripps, head of decarbonisation at Stephenson Harwood, said. "This transaction is significant in contributing to the electrification of public transport across the UK, and Stephenson Harwood's involvement demonstrates how decarbonisation is one of our key areas of focus."

The Stephenson Harwood projects team was led by partner, Jonathan Cripps, with support from managing associates Bertie Chilton and Phil Harris, associates Maneet Sehmi, Nick Abel Smith and Georgina Shenton, and trainee Punte-â Hosseini. The team received cross-practice support from derivatives partner, George Vaughton, managing associate Will Rowling, and associates in the corporate team (Matt Kinghorn, Josh Billig and Alexander Goodman). 

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Bertie Chilton
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