By Kang Doo-soon and Song Gwang-sup
A consortium joined by U.K.-based equity investors and South Korea’s National Pension Service (NPS) acquired Britain’s High Speed 1 (HS1) railway project at more than 3 billion pounds ($3.93 billion), beating out the Dalmore Capital Ltd.-led group including other major Korean insurers and associations.
According to the investment banking industry on Sunday, a group of funds including HICL Infrastructure under InfraRed Capital Partners, Equitix Investment Management Ltd. and NPS, also the world’s third largest pension fund, last week struck the deal to buy HS1 from Borealis Infrastructure and Ontario Teachers’ Pension Plan NPS. The enterprise value of the link was estimated to be more than 3 billion pounds, of which 70 percent is debt. In 2010, Borealis Infrastructure and Ontario Teachers’ Pension Plan purchased the rail link at 2.1 billion pounds, including debt, under a 30-year concession.
Under the advisory of InfraRed Capital Partners, Korea’s NPS will pay 400 billion won ($354.2 million) to 500 billion won for a 30 percent stake. HICL Infrastructure and Equitix Investment Management Ltd. would hold a 35 percent stake, respectively.
HS1 operates the high speed rail line connecting London with the Channel Tunnel, an underwater Eurostar tunnel linking Britain and continental Europe. The contract includes the rights to operate and manage the 109-kilometer track and the four stations served by the route.
Borealis Infrastructure and Ontario Teachers’ Pension Plan have each held a 50 percent stake in HS1 since 2010. The concession expires at the end of 2040, after which they would have to return the assets to the British government in the form of donation. The new owners would hold the rights for the remaining 23 years.
Infrastructure investment has been gaining in popularity as it generally guarantees stable, long-term yields. More Korean institutional investors are seeking to own stakes in European assets in a prolonged low interest rate environment.