Investment in Eurostar
According to investment banking industry sources, a group of South Korean institutional investors recently decided to invest 250 billion won (US$225 million) in the Equitix and InfraRed Capital Partners consortium, which is the preferred bidder for the sale of the High Speed 1 operating rights. Earlier, the National Pension Service of South Korea opted to participate in the same consortium and buy 30% of the shares for 400 billion won (US$360 million).
High Speed 1, officially known as the Channel Tunnel Rail Link, is the only high-speed railway in the UK, and Eurostar uses the rail link to connect London with Paris. The object of acquisition consists of the rights to use and operate the 109 km-long section reaching the Channel Tunnel from London and four station buildings located in the section.
The enterprise value of High Speed 1 amounts to approximately 4.3 trillion won (US$3.8 billion), which includes a debt of about three trillion won (US$2.7 billion). The South Korean institutional investors are to acquire some of the High Speed 1 shares constituting the rest. The investors include Hyundai Marine & Fire Insurance and Hanwha General Insurance, which are planning to invest around 100 billion won (US$90 million) together via Equitix. In addition, Hana Financial Investment invests approximately 150 billion won (US$135 million) with the Korea Scientists & Engineers Mutual Aid Association, Nonghyup Mutual Finance, Heungkuk Fire & Marine Insurance, Lotte Non-Life Insurance, and so on. Their fund will be managed by KDB Infra Asset Management.
The Equitix and InfraRed Capital Partners consortium is going to complete the acquisition process before the end of next month. It is said that the South Korean institutional investors in the consortium are anticipating an annual return of 6% to 7%.