UK - The UK government has sold the high-speed rail network connecting London to the Channel Tunnel to two Canadian pension funds for £2.1bn (€2.43bn).

Borealis Infrastructure, the infrastructure investment arm of the Ontario Municipal Employees Retirement System (OMERS), entered into a joint venture with the Ontario

Teachers' Pension Plan and won the deal following a competitive tender process.

The UK government, through state-owned London & Continental Railways, announced in June the start of a competition to sell a 30-year concession to own and operate High Speed 1 (HS1), the country's only high-speed rail link to the Channel Tunnel.

The 68-mile rail network connects St Pancras International Station in central London via the south east of England to the Channel Tunnel.

Stephen Dowd, senior vice-president at Ontario Teachers' infrastructure group, said:

"HS1 is a high-quality asset ideally suited to our investment criteria, and we are extremely pleased that our bid was selected.

"HS1 will provide stable, inflation-protected returns from proven and long-standing patronage levels, along with upside potential as the European Union moves to liberalise international rail travel.

"Teachers' has positive experience operating major assets in the UK, and HS1 further diversifies our global infrastructure portfolio."

Michael Rolland, president and chief executive at Borealis Infrastructure, said: "This acquisition supports OMERS's long-term strategy to diversify internationally, and we view the UK and Europe as primary markets in meeting this objective.

"HS1 operates in an attractive and stable regulatory environment, with good long-term visibility on inflation-linked cash flows."

HS1 is used every year by more than 9m international passengers and more than 5m domestic customers.

It earns the majority of its revenues from track-access charges under a framework that allows it to receive an inflation-adjusted income stream and recover its operating and maintenance costs from train operating companies.

Approximately 60% of revenue is earned from domestic track-access charges for high-speed services operating between London and the south east of England, and the remaining 40% is earned from international services currently operating from London, Paris and Brussels.

The government sold the asset as part of a wider disposal of state-owned infrastructure assets as it seeks to reduce the UK's national debt.

Philip Hammond, UK transport secretary, said: "This is great news for taxpayers and rail passengers alike. It is an enormous amount of money and is a big vote of confidence in UK plc and a big vote of market confidence in the future of UK high-speed rail."
 

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