Leeds-based Renew said REL will bring “highly complementary” capabilities to Renew’s existing rail offering and will enable the group to further capitalise on the planned increased level of investment by Network Rail into rail electrification.

Analyst Tom Fraine at Shore Capital said: “The transaction expands Renew’s capabilities in the electrification of train lines, an attractive area, in our view, given Network Rail’s plans to spend £800,00 to £1.8bn per year on electrification to decarbonise rail.”

Renew said REL is a leading provider of high quality services and Road Rail Plant associated with the installation and commissioning of Overhead Line Electrification (OLE) in both the light and heavy rail infrastructure sectors across the UK.

It said the deal will strengthen and expand its existing multidisciplinary maintenance and renewals engineering services across the rail network.

As part of the Government’s commitment to delivering a carbon neutral rail network by 2040 for England and Wales and by 2035 for Scotland, it is estimated that there will be around 15,000 single track kilometres of new electrification carried out across Network Rail’s controlled infrastructure over this period.

The recently released Williams Rail Review states that electrification is likely to be the main way of decarbonising the rail network.

The initial consideration for the acquisition was £3.0m in cash, with further deferred cash payments of up to £2.3m payable between now and September 2024, conditional on the achievement of certain targets. The consideration has been funded from Renew’s existing cash resources.

Paul Scott, chief executive of Renew, said: “The rail network has a crucial part to play in supporting the UK’s commitment to Net Zero 2050 and this acquisition will help enable Renew to play a bigger part in Britain’s green economic recovery.

“REL is a highly regarded business with a strong track record and will enable us to broaden our service offering within our rail business.

“Our existing multidisciplinary rail capability, complemented by the electrification expertise of REL, leaves Renew ideally positioned to play its part in delivering a decarbonised railway. Rail electrification offers attractive long term structural growth opportunities underpinned by highly visible committed regulatory spend in a sector that we know extremely well. I am delighted to welcome the management and staff of REL to the Renew family.”

Alan McLeish, managing director of QTS, added: “QTS has grown rapidly over the last decade and, in order for us to continue that growth, we knew we needed to add to our already impressive portfolio of capabilities.

“The next natural step was electrification, which allows us to give a fully rounded service to our clients.

“By adding REL to the QTS Group, we are joining forces with a leading business in this area, which will be a great benefit to the work that we deliver for our clients. I am looking forward to integrating the REL team into QTS.”