HICL, NPS and Equitix snap up HS1 for £914m

Group has bought the UK rail concession from Borealis and OTPP, giving it a £3bn enterprise value.

A consortium comprising HICL Infrastructure, Equitix and South Korea’s National Pension Service has agreed to buy the concession for the UK’s HS1 rail link after inking a £914 million ($1.2 billion; €1 billion) deal.

The group is set to acquire control of the UK’s only operational high-speed rail service from its Canadian shareholders Borealis and the Ontario Teachers’ Pension Plan after the pair bought the 30-year concession from the UK government in 2010 for an enterprise value of £2.1 billion. The new consortium declined to disclose the enterprise value of its acquisition, although it is believed to be worth over £3 billion.

HICL and Equitix have each taken a 35 percent share in the agreement, with the NPS, advised by HICL’s investment manager InfraRed Capital Partners, holding the remaining 30 percent. HICL intends to syndicate its share to bring in minority co-investors managed by InfraRed, reaping a sale worth £120 million after the firm and Equitix each paid £320 million for their stakes.

The 109km rail service between London’s St Pancras International station and the Channel Tunnel carried 20 million passengers in 2016 and recorded an EBITDA in its last financial statements of £185 million in the year ending March 2017, up from £180.5 million the previous year.

Both OTPP and Borealis remained bullish on continuing to invest in UK infrastructure assets, with Borealis a shareholder in Thames Water and its compatriot an owner of a number of airports. The duo had announced a strategic review of their ownership of HS1 in December after receiving “a number of investment inquiries”.

“We are confident that HS1 will continue to prosper under its new ownership, while Ontario Teachers’ remains committed to the UK as an attractive destination for future investment,” Jo Taylor, senior managing director of Ontario Teachers, said. “The government’s approach to the concession agreement partnership with the international investment community reflects an excellent model for infrastructure opportunities moving forward.”