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11/12/2016

UK sells Eurostar stake

UK & Europe

UK sells Eurostar stake

The British government has agreed to sell its 40% stake in Eurostar for a total of £757 million.

The purchasing consortium will pay £585 million to the government. As part of the deal, Eurostar have agreed to redeem the government’s preference share, which will raise an additional £172 million.

George Osborne, Chancellor of the Exchequer, said the deal “exceeded expectations”. According to government accounts for 2013/2014, the share capital value of the stake was £325 million.

The consortium, Patina Rail LLP, is made up of Caisse de dépôt et placement du Québec, who will own a 30% stake in Eurostar and Hermes Infrastructure, part of British-based fund, Hermes Investment Management, who will take a 10% stake.

The remaining 60 percent of Eurostar will continue to be held by French rail operator SNCF, which has a 55%, and Belgian national rail operator SNCB, which has a 5 percent stake.

The deal is expected to be completed by the second quarter of 2015 subject to regulatory approval and the existing shareholders not exercising their option to acquire the stake.

Should they wish to do so they would have to pay a 15% premium on today’s announcement.  They have 20 business days to decide.

Deputy Prime Minister and Liberal Democrat (ALDE), Nick Clegg said, “I think it was a good deal. I don’t see any ideological reason why the state should run a [railway].”

The Green Party said it opposed the sale of profitably state owned assets. 

More than 150 million passengers have used Eurostar since services began in 1994. Over 10 million people used Eurostar last year resulting in profits of £55 million.

In May this year, Eurostar will launch a new all year-round direct service to the South of France stopping in Lyon, Avignon and Marseille.