5 November 2010
Two Canadian pension funds have clinched a £2bn deal to acquire the High Speed 1 rail route between London and the Channel Tunnel.
The government announced the sale of the line, which was completed in 2008, in June as part of efforts to reduce national debt. Transport secretary Philip Hammond this morning announced a consortium comprising Borealis Infrastructure and Ontario Teachers’ Pension Plan will pay the government a total concession value of £2.1bn to operate the line for the next 30 years.
The consortium will take on the management of the 68 mile line which links London to the Channel Tunnel following completion later this month. The consortium will be responsible for running the line as well as stations such as St Pancras International, and the international stations at Stratford, Ashford and Ebbsfleet.
Borealis Infrastructure is the infrastructure investment arm of the OMERS Worldwide group of companies, one of Canada’s largest pension plans. Meanwhile, the Ontario Teachers' Pension Plan is the largest single-profession pension plan in Canada and already has a number of investments in the UK including airports in Bristol and Birmingham.
Commenting on the deal Hammond said: “This is great news for taxpayers and rail passengers alike. It is a big vote of confidence in UK plc and a big vote of market confidence in the future of high speed rail. It also shows that the decisive action this Government has taken to reduce the deficit is already paying dividends and that investors believe once again that Britain is open for business. “The £2.1bn receipt exceeds the highest expectations for the sale and will make a welcome contribution to reducing the deficit. "I look forward to working with the new concessionaire and to the benefits passengers will see as High Speed 1 seeks to attract new services to the line, allowing British passengers to travel by high speed train to even more destinations across Europe. “This is an exciting time for rail travel and an important step in our plans to develop a truly national and international high speed network for British travellers.”
The successful sale was managed for the government by London & Continental Railways. Commenting on today’s announcement, L&CR chief executive Mark Bayley said: “High Speed 1 is a unique, high quality infrastructure asset which speeds tens of thousands of people between London, Kent and continental Europe every day. I am very proud to have been associated with the business and its excellent management, and believe that we have achieved an extremely good price for HS1 through a very competitive process.”
High Speed 1 is currently used by international Eurostar services between London and European destinations as well as domestic high speed services between London and Kent operated by Govia subsidiary Southeastern. Additional international services are likely to commence in the coming years. Last month German rail giant Deutsche Bahn confirmed that it is planning new high speed services between London, Amsterdam and Frankfurt from 2014. Meanwhile, the DfT has confirmed that the performance of the new operator of the line will be independently policed by the Office of Rail Regulation to ensure that "rail passengers' interests are effectively safeguarded".
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