The mechanisms of polymerization of epsilon-caprolactone (CL) initiated by either the rare-earth hydride [Cp2Eu(H)] or the borohydrides [Cp2Eu(BH4)] or [(N2NN')Eu(BH4)] were studied at the DFT level (Cp=eta5-C5H5; N2NN'=(2-C5H4N)CH2(CH2CH2NMe)2). For all compounds the reaction proceeds in two steps: a hydride transfer from the rare earth initiator to the carbonyl carbon of the lactone, followed by ring-opening of the monomer. In the last step a difference is observed between the hydride and borohydride complexes, because for the latter the ring-opening is induced by an additional B-H bond cleavage leading to a terminal--CH2OBH2 group. This corresponds to the reduction by BH3 of the carbonyl group of CL. Upon reaction of [Cp2Eu(H)] with CL, the alkoxy-aldehyde complex produced, [Cp2Eu(O(CH2)5C(O)H)], is the first-formed initiating species. In contrast, for the reaction of CL with the borohydride complexes [(Lx)Eu(BH4)] (Lx=Cp2 or N2NN'), an aliphatic alkoxide with a terminal--CH2OBH2 group, [(Lx)Eu(O(CH2)6OBH2)] is formed and subsequently propagates the polymerization. The present DFT investigations are fully compatible with previously reported mechanistic studies of experimental systems.