VINCI, AXA awarded €7.8bn French HSR deal

French rail agency RFF has officially awarded a €7.8bn contract to build and operate a 300-kilometre high-speed rail line connecting the western cities of Tours and Bordeaux.

VINCI, AXA Private Equity and Caisse des Dépôts have been officially awarded the €7.8 billion contract to build and operate France’s biggest concession contract – a 302-kilometre high-speed rail (HSR) line between the western cities of Tours and Bordeaux.

Tours-Bordeaux: France's
biggest concession deal

The VINCI-led Lisea consortium was named preferred bidder for the 50-year contract by railways agency RFF at the end of March. The contract will be finalised this autumn with construction works to start toward the end of 2011, once land expropriation procedures have been completed, RFF said.

Speaking at the Infrastructure Investor: Europe 2010 forum in Berlin, Romain Verzier, head of structured finance at VINCI, said the project will be financed using €3.1 billion of debt, approximately €3.5 billion of subsidies from the French government, and more than €600 million of equity from the Lisea consortium.

That would amount to a total of €7.2 billion, the project’s estimated cost at the end of March. None of the parties could be reached to comment on the price increase at press time. In its statement, RFF said negotiations with the regional authorities – which will provide part of the public contributions for the project – were still ongoing.

The consortium will be remunerated through user fees from passengers using the rail line and the project will be eligible for the government’s debt guarantee, which can cover up to 80 percent of the commercial debt on the deal.

For VINCI and AXA, this is the second rail-related public-private partnership the firms have worked on together in France, after the €1 billion GSM-R rail communications project that closed in February.