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Government to sell Eurostar stake for £757m

The government has agreed to sell its 40% share in Eurostar, plus its preference share, for a total of £757.1m to an Anglo-Canadian consortium. 

Patina Rail LLP, a consortium of Canada-based Caisse de dépôt et placement du Québec (CDPQ) and Hermes Infrastructure, will buy the shares with a 30% and 10% split, respectively. 

Eurostar’s other shareholders will be the French railway (SNCF) and Belgian railway (SNCB), with a 55% and 5% stake respectively. 

The consortium has agreed to acquire the government’s 40% stake in Eurostar for £585.1m, after it was announced by the Treasury in October 2014 that it was inviting offers for a ‘quick sale’ of its shares. Once that sale goes through, Eurostar has agreed to redeem the UK government’s ‘preference share’, providing a further £172m for the exchequer. 

The SNCF must still get clearance from the European Commission under the EU Merger Regulation, as well as the German Federal Cartel Office.  

SNCF and SNCB still have the option (the Pre-emption Right) to acquire the government’s 40% shareholding for a 15% premium on top of the agreed price.  

It is anticipated that the transaction will close during the second quarter of 2015. 

CDPQ is a long-term institutional investor, founded 50 years ago, which manages funds primarily for 33 public and para-public pension and insurance plans. 

Macky Tall, senior vice-president, Private Equity and Infrastructure, CDPQ said: “Today we are investing in one of Europe’s most efficient intercity transport systems. Alongside leading industry players, we are becoming partners of a highly strategic asset that will generate stable and predictable returns for our clients. 

“This major investment is another opportunity for us to further build on our expertise in the transport sector, while broadening our footprint in the global marketplace.” 

Hermes Infrastructure, part of Hermes Investment Management, is a UK-based fund managing approximately £3bn on behalf of clients, including the Hermes GPE Infrastructure Fund. 

Peter Hofbauer, head of Hermes Infrastructure, added that Eurostar is a high-quality asset providing a direct link between the UK and Europe that has historically offered attractive investment characteristics, including long-term stable and predictable cash flows. 

“We look forward to creating a long-term partnership with SNCF and SNCB and other key stakeholders in relation to this important investment,” he said. 

Chancellor George Osborne stated that it was “great” that the government had reached an agreement to sell the UK’s shareholding in Eurostar that “delivers a fantastic deal for UK taxpayers that exceeds expectations”. 

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