Macquarie set to invest big ticket in Swedish rail

MEIF5 is seeking to help Inlandsbanan modernise a railway in part over 100 years old, a deal that would represent Macquarie’s second Swedish rail investment after exiting Arlanda in 2014.

Macquarie is in the process of negotiating an investment worth several hundred million euros into municipality-owned Swedish rail line Inlandsbanan.

While the deal is currently at the MoU stage, it is understood the €4 billion Macquarie European Infrastructure Fund 5 could invest a substantial amount in Inlandsbanan, although it is not clear at this stage the size of the equity stake the Australian investor could purchase.

Inlandsbanan said it hopes to reach an agreement “as soon as possible” with Macquarie, although a more likely timeframe is believed to feature a conclusion towards the end of the year. The negotiations are being carried out with representatives of the 15 Swedish municipalities which own the network.

Macquarie declined to comment.

Inlandsbanan is pursuing an agreement with Macquarie because of its financial strength and experience in large projects, its chief executive Peter Ekholm told Infrastructure Investor. While the 1,288km line is an important route for transporting both passengers and goods, it also serves a purpose as a scenic tourist attraction. Ekholm added that Macquarie’s potential investment will be significant for Inlandsbanan, with parts of the route almost 100 years old and requiring considerable modernisation.

Macquarie is no stranger to the Swedish rail market, having purchased A-Train, the owner of the Arlanda Express rail service between Stockholm Central Station and Arlanda Airport, in 2003 for A$76 million ($56.9 million; €50.6 million). The asset formed the seed portfolio of Macquarie’s €1.5 billion debut European infrastructure fund.

However, the investment turned sour earlier this decade after Swedish tax authorities pursued the proceeds of a state loan from Macquarie and Arlanda. Macquarie emerged victorious from a court battle in 2012 and subsequently sold the rail service to New South Wales’ State Super, Queensland’s Sunsuper and funds managed by China’s Gingko Tree Investments in 2014. Ekholm said there are no concerns surrounding the case regarding Macquarie’s investment in Inlandsbanan.