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The cost of selling Eurostar International Limited

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The UK government has reached agreement for the sale of its entire interest in Eurostar International Limited (“Eurostar”) for £757.1m.

[UK Government reaches agreement on the sale of its entire interest in Eurostar for £757.1m, gov_uk, 4 March 2015]

The Chancellor, George Osborne, and the Chief Secretary, Danny Alexander announced today that the UK government has reached agreement for the sale of its entire interest in Eurostar International Limited (“Eurostar”) for £757.1m.

A consortium comprising Caisse de dépôt et placement du Québec (CDPQ) and Hermes Infrastructure has agreed to acquire government’s 40% stake in Eurostar for £585.1m. The sum exceeds expectations for the 40% stake when the government announced that it was inviting offers for its stake in October 2014. Eurostar has, on closing of the sale of the government stake, agreed to redeem HMG’s preference share, providing a further £172m for the exchequer.

[…] Founded 50 years ago, CDPQ is a long-term institutional investor that manages funds primarily for 33 public and para-public pension and insurance plans. As at December 31, 2014, it held C$226 billion in net assets. As one of Canada’s leading institutional fund managers, CDPQ invests globally in major financial markets, private equity and real estate. It also brings a strong track record of global infrastructure investment, with an investment portfolio valued at over C$10 billion. CDPQ holds the highest credit ratings from DBRS, Standard & Poor’s and Moody’s.

Hermes Infrastructure, part of Hermes Investment Management, is a UK-based fund managing approximately £3 billion on behalf of clients including the Hermes GPE Infrastructure Fund (“HIF”). Hermes Infrastructure is focused on delivering enhanced risk-adjusted returns for investors through a range of investment strategies and a diversified infrastructure portfolio.

SNCF and SNCB – the other shareholders in Eurostar – have the option (the “Pre-emption Right”) to acquire HMG’s 40% stake for a 15% premium to the agreed price of £585.1m. Closing of the sale to the CDPQ and Hermes Infrastructure consortium is conditional on SNCF and SNCB not exercising the Pre-emption Right. The transaction is also conditional on regulatory approval.

Of course, the proceeds of the sale are just a small fraction of the amount of public cash put into Eurostar, since it was set up.

Extract from 'Alstom Transport v Eurostar International Ltd [2012] EWHC 28 (Ch)'

European Commission approval of GB state aid to Eurostar

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Written by beleben

March 4, 2015 at 12:33 pm

Posted in High speed rail, HS2

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One Response

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  1. When the Chancellor was interviewed on the Radio 4 ‘Today’ programme to announce this ‘coup’, he was said to have a smug smile (you had to be grateful for radio at this time – pity poor Jim), £750m is after all a lot of money whatever the write-offs and sweeteners to secure the deal which clearly does not concern him.
    Fortunately, in his more modest personal financial life, there is little cause for such concern having sold his Cheshire (non-Tatton) home for double the purchase price a few short years after becoming a local MP.

    mcMichael

    March 6, 2015 at 12:02 am


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