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November 05, 2010

Canadian pension funds buy High Speed 1

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TWO CANADIAN pension funds have won the race to operate Britain's 110km High Speed 1 rail link from London St Pancras to the Channel Tunnel. Borealis Infrastructure and the Ontario Teachers' Pension Plan will pay £2.1 billion to run the line for the next 30 years, slightly above the £1.5 - £2 billion estimate that state-owned London & Continental Railways (LCR) aimed to raise from the sale.
 
British secretary of state for transport Mr Philip Hammond says that the pension fund's business plan will rely on introducing new services on the route. "We have a private sector operator with every incentive to get extra traffic on the line, that will mean more traffic, more destinations, more station stops, all the things that UK passengers have been asking us for," Hammond says.
 
hs1_javelin.jpgThe British government decided to sell the concession to raise cash to help ease Britain's estimated £155 billion budget deficit.
 
Hammond added that as a 30-year concession the British government still owns the line, and that the investment is an important step in developing truly national and international high-speed network for British passengers. "It will underpin our transport infrastructure development programme over the next few years," he says.
 
The Borealis consortium defeated a consortium of Eurotunnel and Goldman Sachs, a consortium headed by German group Allianz, and a group led by Morgan Stanley.
 
The sale is the first stage of a restructuring and privatisation of LCR planned since 2006 with further assets set to be sold off as market conditions allow. However, LCR is expected to retain its minority stake in Eurostar.
 
High Speed 1 is currently used by Eurostar and Southeastern's domestic Javelin trains that serve destinations in Kent.

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