Canadian pension funds win UK high-speed rail deal

Fri Nov 5, 2010 10:35am EDT
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By Rhys Jones

LONDON (Reuters) - Two Canadian pension funds will pay 2.1 billion pounds ($3.39 billion) to operate Britain's only high-speed railway, the first privatization of a coalition government intent on cutting the national deficit.

Ontario Teachers' Pension Plan (OTPP) and Borealis, the infrastructure investment arm of Ontario Municipal Employees Retirement System, beat rivals including Eurotunnel, Morgan Stanley and Allianz for the 30-year concession for the High Speed 1 (HS1) line linking London to the Channel Tunnel.

Passenger services through the tunnel, which is operated by Eurotunnel, are run by Eurostar and directly link Britain with France and Belgium.

"It is an enormous amount of money, a big vote of confidence in UK plc and a big vote of market confidence in the future of UK high-speed rail," British Transport Secretary Philip Hammond said in a statement on Friday.

"It also shows the decisive action this government has taken to reduce the deficit is already paying dividends and investors believe once again that Britain is open for business."


The coalition has vowed to reduce Britain's debt and slash a budget deficit that this year will be about 150 billion pounds. The HS1 price tag beat analysts' expectations for between 1.5 and 2 billion pounds.

The line, which cost about 5.8 billion pounds to build, became fully operational in November 2007.   Continued...