Oct 29 deadline for UK high-speed rail binding bids

Consortia led by Eurotunnel/Goldman Sachs, Morgan Stanley/3i, Borealis/OTPP and Cheung Kong Infrastructure are all thought to have made it through to a second round of bidding. The sale is expected to net the government between £1.5bn and £2bn.

The UK government’s sale of the high-speed rail line connecting London to the Channel Tunnel is moving closer to the finish line, with the consortia that went through to a second round of bidding asked to submit binding offers by October 29, a source close to the deal said.

HS1: Four go
through to second
round bidding

The asset, known as High-Speed 1 (HS1), is thought to have attracted initial bids from four consortia, all of which are understood to have made it through to a second round of bidding. The largest of these is a team comprising  Eurotunnel, Goldman Sachs, M&G’s Infracapital Partners, UK pension Universities Superannuation Scheme and CDC Infrastructure, the infrastructure investment arm of French bank Caisse des Dépôts et Consignations.

Other consortia include a team of Morgan Stanley Infrastructure, 3i Infrastructure and Abu Dhabi Investment Authority; a Canadian consortium of Borealis – the investment arm of Ontario Employees Retirement System – together with Ontario Teachers’ Pension Plan; and Cheung Kong Infrastructure, the infrastructure vehicle of Asia’s wealthiest man, Li Ka-Shing.

HS1, which owns the railway stations and 110-kilometre track connecting London with the Channel Tunnel, is estimated to be worth between £1.5 billion (€1.8 billion; $2.3 billion) and £2 billion. It holds a 30-year concession to operate the high-speed rail link, and expects revenue of £263 million with earnings before interest, tax, depreciation and amortisation (EBITDA) of £135 million for the year through March 2011, according to Reuters.

A source involved in the deal had previously suggested that a preferred bidder announcement should take place in late autumn with the government targeting an end-of-year completion date for the deal. Swiss bank UBS is running the sale for the government, which originally spent some £5.7 billion to build HS1.