Britain agrees to sale of Eurostar stake to British, Canadian funds

Wed Mar 4, 2015 10:08am EST
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LONDON (Reuters) - Britain agreed to sell its 40 percent stake in the Eurostar rail link for 585 million pounds ($899.79 million) to a consortium of Canadian public pension fund Caisse de Depot du Placement du Quebec and British asset manager Hermes.

The government announced the deal for its stake in the high-speed rail link between Britain and continental Europe on Wednesday following a competitive sale process begun in October by finance minister George Osborne.

Osborne said the price tag exceeded expectations. According to 2013/14 government accounts, the share capital value of the stake was 325 million pounds. Investment bank UBS UBSG.VX advised the government on the sale.

The deal is part of a trend for institutional investors such as pension funds and insurers, squeezed by low interest rates globally, to buy into infrastructure projects.

Such investments are high-yielding and match the long-term liabilities in pension and savings plans, but a lack of attractive opportunities has pushed up prices. [ID: nL6N0UV1G3]

"It remains something that we are cautious about," Macky Tall, Caisse senior vice president for private equity and infrastructure, said in Montreal.

Tall said Caisse and Hermes worked on the Eurostar deal for months, "and we are sure that we have valuated it properly."

The finance ministry said it expected to complete the sale by the second quarter.

The consortium, Patina Rail LLP, will result in Caisse, which has an infrastructure investment portfolio valued at more than 10 billion Canadian dollars ($8.02 billion), owning a 30 percent stake in Eurostar. Hermes Infrastructure, part of British-based fund Hermes Investment Management, will own 10 percent.   Continued...

An idle high speed Eurostar train is seen through glass panels at the Paris Gare du Nord train station after the suspension of rail traffic due to smoke coming out of the Channel tunnel January 17, 2015.   REUTERS/Stephane Mahe