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Four Groups In Due Diligence For U.K. High-Speed Rail -Sources

Published Thursday, 9th September 2010 11:56 pm - © 2010 Dow Jones

By Jessica Hodgson


LONDON -(Dow Jones)- At least four bid consortia have gone through to the second round in the auction for the U.K.'s only high-speed rail link, High Speed 1, people familiar with the matter say, and due diligence is already underway.

Bidders have been asked to submit fully financed offers by Oct. 29, these people said.

One consortium consists of Eurotunnel PLC (ETL.LN) and two of its shareholders: Infracapital, owned by Prudential PLC's (PRU.LN) asset management arm M&G Investments, and Goldman Sachs Group Inc., (GS) alongside the University Superannuation Scheme, the U.K.'s second-largest pension fund and CDC Infrastructure, owned by France's Caisse des Depots et Consignations.

A second bidding group includes Morgan Stanley's (MS) infrastructure fund, 3i Group PLC's infrastructure fund, (3IN.LN) and the Abu Dhabi Investment Authority.

Hong Kong billionaire Li Ka-Shing Cheung Kong Infrastructure (CKI) is also through to this round of the process, a person familiar with that company's intentions said.

A fourth consortium has also bid, several people said. It remains unclear whether that consortium includes two Canadian pension funds: Borealis, the infrastructure investment arm of Ontario Municipal Employees Retirement System, with the Ontario Teachers Pension Plan, as reported in several media outlets.

Ontario Teachers declined comment, Borealis couldn't immediately be reached for comment.

A spokesman for London & Continental Railways, the U.K. government-owned parent of High Speed 1, declined to comment.

The winning bidder for this asset will receive a 30-year concession to run the 68-mile stretch of railway that connects London's St Pancras station with the channel tunnel. It is one of a series of moves by the U.K. government to trim a gaping budget deficit of about GBP155 billion.

The valuation of the rail link is expected to be anything between EUR1.5 billion and EUR2 billion, people familiar with the matter said. UBS A.G. (UBS) is handling the sale.

The rail link cost around GBP6 billion to build and opened in November 2007.

-By Jessica Hodgson, Dow Jones Newswires; +44207 8429373;

(Marietta Cauchi contributed to this article.)

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