Eurostar sale to net British taxpayers more than £750m

04 Final Eurostar Image

The British government is selling its stake in Eurostar in a deal that will deliver £757m to the taxpayer.

The sale price is higher than was expected when the government announced that it was inviting offers for its stake, in October 2014. George Osborne described it as a “fantastic deal for UK taxpayers that exceeds expectations”.

The government has agreed to sell its 40% stake in the profit-making rail service for £585m to a consortium of the Canadian institutional investor Caisse de dépôt et placement du Québec (CDPQ) and UK based Hermes Infrastructure.

Eurostar has also agreed, as part of the sale of the government stake, to redeem the Treasury’s preference share, providing a further £172m to the UK taxpayer.

French and Belgian railway firms SNCF and SNCB are retaining their stake in Eurostar and still have the option to buy the UK government’s 40% stake for a 15% premium to the agreed price.

They have 20 business days to decide whether to exercise the option, but are not expected to do so.The French are already partners with the Canadian pension fund in a separate rail venture.

Ministers said the sale price is significantly ahead of expectations and reflects the value of the asset. Competition for the UK share had included the private equity firm 3i and Predica, a division of French bank Credit Agricole.

Ministers are trying to secure £20bn from corporate and financial asset sales by 2020, and believe the Eurostar sale can be complete by the second quarter of this year.

Since services began in 1994, Eurostar has carried more than 150 million passengers, with over 10 million in 2014 alone, while sustaining traffic growth every year for the past decade.

La Caisse de dépôt et placement du Québec is a long-term institutional investor that manages funds primarily for 33 public and pension and insurance plans.

Hermes Infrastructure, part of Hermes Investment Management, is a UK-based fund managing approximately £3bn on behalf of clients.

Danny Alexander, chief secretary to the Treasury said: “There’s no virtue in the government owning assets it doesn’t need to.”

 

 

Powered by Guardian.co.ukThis article was written by Patrick Wintour, political editor, for The Guardian on Wednesday 4th March 2015 00.01 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

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