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Financing for investments in local public transport

KfW IPEX-Bank is financing investments in local public transport (LPT) within Germany and Europe and is thus helping to protect both the environment and the climate while also enhancing mobility.

VGF financing case: New railcars for the Frankfurt underground

One example is the financing provided to Frankfurt am Main Transport Company (Verkehrsgesellschaft Frankfurt - VGF) for the acquisition of new rail vehicles for operation in Frankfurt's underground network. An order for 146 U5 light rail vehicles was placed with manufacturer Bombardier Transportation back in May 2008; these are still being gradually delivered through 2015.

The U5 units, which were specifically developed for use in the city, will be the fifth generation of light rail vehicles in Frankfurt. In addition to safety, passenger friendliness and comfort, the design of the new vehicles is primarily characterised by the principles of accessibility, to allow individuals with limited mobility to make independent use of local public transport.

All the vehicles are being produced at the Bombardier plant in Bautzen, eastern Saxony, while the bogies are being built at the Siegen site and the electrical equipment is supplied from the Mannheim factory.

Incorporation of promotional programmes for municipal enterprises

During the first half of 2013, KfW IPEX-Bank financed 78 of the rail vehicles that were delivered just this year. The carriages are being financed by means of the promotional programme "Investment Loans for Municipal and Social Enterprises" (Investitionskredit kommunale und soziale Unternehmen - IKU), which is offered by KfW. The KfW programme enables municipal and non-profit organisations to obtain low-interest and long-term financing for investments in municipal and social infrastructure. Using this as a basis, commercial banks – such as KfW IPEX-Bank – grant low-interest, commercial loans at their own risk.

VGF financing at a glance:

  • Financing contribution: EUR 50 million
  • KfW IPEX-Bank as the sole arranger and lender
  • Financing term: 20 years including a grace period of three years and equable, full amortisation
  • Interest: fixed-rate loan under the KfW programme "Investment Loans for Municipal and Social Enterprises"