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14 July 2017
Canadian Pension Funds Sell
Britain's High-Speed 1 Rail Link


London England United Kingdom - Two leading Canadian pension funds have agreed to sell their stakes in Britain's High Speed 1 (HS1) rail project to a consortium of funds including HICL Infrastructure and South Korea's National Pension Service.
 
The deal valued HS1 at more than £3 billion, two sources said.
 
British investor HICL Infrastructure said it would pay about £320 million for its 30 percent stake, giving an indicative equity value of £915 million.
 
The South Korean pension fund would also take a 30 percent stake in the consortium, with Equitix Investment Management funds holding the remaining 35 percent.
 
Infrastructure is an increasingly attractive asset class for investors looking for stable, long-term yields, and the involvement of South Korea's public pension plan reflects growing interest by Asian buyers in prime European assets.
 
The deal was struck with Borealis Infrastructure, the infrastructure investment manager of the Ontario Municipal Employees Retirement System (OMERS), and Ontario Teachers' Pension Plan, which have held their stake since 2010.
 
HS1 operates the 109 kilometre (68 mile) high-speed rail line connecting London St Pancras International station with the Channel Tunnel, under a 30 year concession signed in 2010.
 
Seven years ago Borealis and Ontario Teachers' paid £2.1 billion to operate Britain's only high speed railway, beating rivals including Eurotunnel, Morgan Stanley, and Allianz.
 
"We are confident that HS1 will continue to prosper under its new ownership, while Ontario Teachers' remain committed to the U.K. as an attractive destination for future investment," Jo Taylor, senior managing director of Ontario Teachers', said.
 
Operators pay index-linked access charges to HS1, partly regulated and partly depending on the number of trains.
 
They include Eurostar and Southeastern Trains, which operates domestic high-speed services.
 
In the 12 months ending March 2017, HS1 made a loss of £94 million.
 
Borealis and Ontario Teachers' announced late last year that they were contemplating the sale of HS1 after receiving investment inquiries from third parties.
 
Simon Jessop.

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