Canadian Pension Fund Buys 30% Into UK’s Eurostar High-Speed Rail Network
Canadian pension fund manager, Caisse de dépôt et placement du Québec has bought 30 percent controllership stake into Eurostar International -- the high-speed rail network that links London and Paris, as well as London and Brussels.
The U.K. government has 40 percent holding in the rail company. Apart from Caisse, British asset manager Hermes Infrastructure will acquire the remaining 10 percent through a consortium called Patina Rail LLC. Caisse’s purchase translates to some £440 million ($850-million).
The British government wanted to divest its shares in the Eurostar International to raise enough case that could help reduce national debt. It was hoped the sell-off could raise at least £300 million. The total transaction value of the Caisse and Hermes purchase is believed to reach £757 million, according to the Globe and Mail.
Caisse expects to close the deal on the second quarter of 2015, if the state-owned railways in France and Belgium do not exercise their rights to purchase the British government’s stake. Together, France and Belgium own the remaining 60 percent of Eurostar. They could push to exercise their right by paying a 15 percent premium to the agreed price.
“We don’t think they will exercise it and hope they would not… but it remains in their discretion,” Macky Tall, senior vice-president of private equity and infrastructure at the Caisse, was quoted by The Financial Post.
Eurostar, launched in 1994, offers train service up to 300 kilometres an hour through the English Channel tunnel. It runs between London and Paris, as well as London and Brussels. It travels 2 hours and 15 minutes between France and Britain’s two largest cities for £69. In 2014, it carried over 10.4 million people.
Tall said the investment is another opportunity for the company to further build its expertise in the transport sector, noting Caisse’s global infrastructure investment portfolio was valued at more than C$10 billion as of Dec. 31.
Apart from Europe, Caisse has also investments in Australia, particularly in the Port of Brisbane. It is also checking a few deals in emerging countries like Mexico. Potential targets include energy infrastructure, roads, bridges and rail.
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