Financial close of South Africa’s $3.3bn (R25.5bn) Gautrain rapid rail link project in the Gauteng province was reached on 25 January 2007. The Gautrain project is the world’s second-largest rail public private partnership (PPP) project after the London Underground PPP (on which we also advised) and the largest greenfield rail project currently under construction globally.

Commercial close had previously been achieved on 28 September 2006 with the concession agreement being signed between the Gauteng provincial government, which procured the project, and Bombela, a consortium whose shareholders include Bombardier, Bouygues Travaux Publics,Murray & Roberts and Strategic Partners Group. Construction of the 80km high-speed rail link has already commenced, with the first phase of the project due to be completed by 2010. The project, part of a plan to revitalise the South African rail network, will connect OR Tambo International airport, Sandton, downtown Johannesburg and Pretoria.

More than 85 per cent of the financing for the project is being funded by the Gauteng provincial government, including through central government funds. The balance is being funded by commercial bank facilities and equity.We acted, together with South African law firm Bowman Gilfillan, for The Standard Bank of South Africa Limited and Rand Merchant Bank (a division of FirstRand Bank), the lead arrangers and underwriters of the $410m (R3bn) commercial debt funding package, consisting of senior, mezzanine and standby facilities.