(Updates with details throughout)
DOW JONES NEWSWIRES
Two big Canadian pension funds beat out at least two other
bidders to acquire the high-speed rail link connecting London with
the Channel Tunnel in a deal valued at GBP2.1 billion, as Canadian
pension funds look for steady sources of cash flow from
infrastructure investments to help them meet the funding
obligations of their pension plans.
Borealis Infrastructure, the infrastructure investment arm of
Ontario Municipal Employees Retirement System, or OMERS, and
Ontario Teachers' Pension Plan, two of the country's biggest
pension funds, said early Friday they won the right to own and
operate the 68-mile High Speed 1 rail network under a 30-year
concession.
The pension funds will each own 50% of the concession, a
Teachers' spokeswoman confirmed.
OMERS and Teachers' beat out at least two other bidders in an
auction the U.K. government launched in June. Dow Jones reported
earlier this week that Groupe Eurotunnel SA (GET.FR) and two of its
shareholders, Infracapital and Goldman Sachs Group Inc. (GS), and
another group comprised of Morgan Stanley's (MS) infrastructure
fund, 3i Group PLC's (III.LN) infrastructure fund and the Abu Dhabi
Investment Authority, also participated in the auction.
Representatives for OMERS and Teachers' said they couldn't
comment on the transaction beyond their news releases until the
deal closes, which should be shortly.
In the releases, OMERS and Teachers' said the transaction is
consistent with their strategies to diversify their investments
globally and seek "stable inflation-protected returns."
More than 9 million international and over 5 million domestic
passengers use HS1 annually. The rail network generates the
majority of its revenues from track access charges under a
structure allowing it to receive an inflation-adjusted income
stream and recover its operating and maintenance costs from train
operating companies. Approximately 60% of revenue is earned from
domestic track access charges for high-speed services operating
between London and southeast England and the remaining 40% is
earned from international services currently operating from London,
Paris and Brussels.
Teachers' oversees about C$96.4 million in assets and of that
total about C$8 billion is allocated to infrastructure investments
in the U.K., Canada, Chile and elsewhere. In the U.K., Teachers'
investments also include Camelot Group, Acron Care and Bristol
International Airport among others.
OMERS oversees a total of about C$48 billion of assets and its
infrastructure arm Borealis has about C$7 billion invested in more
than 20 businesses in the U.K., the U.S. and Canada.
Websites: www.omers.com, www.borealis.ca
-By Ben Dummett, Dow Jones Newswires; 416-306-2024;
ben.dummett@dowjones.com;
(Judy McKinnon in Toronto contributed to this article.)