LONDON -- 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 pounds (US$3.9 billion), two sources said. HICL Infrastructure said it would pay about 320 million pounds for its 30-per-cent stake, giving an indicatie equity value of 915 million pounds.
The South Korean pension fund would also take a 30-per-cent stake in the consortium, with the Equitix funds holding the remaining 35 per cent.
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 OMERS, the pension plan for Ontario's municipal employees, and Ontario Teachers' Pension Plan, which has held its stake since 2010.
HS1 operates the 109-kilometre 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' pension plan paid 2.1 billion pounds 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," Ontario Teachers' Senior Managing Director Jo Taylor 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 pounds.
(US$1 = 0.7646 pounds)