Canadian Pensions and Others Compete for UK Rail Bid

(August 9, 2010) — Ahead of a mid-August deadline to ameliorate the UK government’s growing budget deficit, a handful of groups are preparing to bid for Britain’s only high-speed rail link, which is likely to cost between $2 billion (€1.5 billion) and $2.6 billion (€2 billion).

The competing consortiums, the Wall Street Journal reports, consist of 1) a group of largely Canadian pension funds including Borealis, the infrastructure investment arm of the Ontario Municipal Employees Retirement System (OMERS); 2) Eurotunnel PLC and two of its shareholders as well as Goldman Sachs Group Inc; and 3) the infrastructure arm of Morgan Stanley, 3i Group PLC’s infrastructure arm, and the Abu Dhabi Investment Authority (ADIA).

The interest from the consortium of Canadian pension funds illustrates a growing trend as Canada’s schemes become increasingly active in acquiring UK companies. In late July, Canada Pension Plan Investment Board (CPPIB) and Onex Corp., the nation’s largest buyout firm, agreed to buy Tomkins Plc for $4.5 billion. In late March, the Ontario Teachers Pension Plan (Teachers’), Canada’s largest pension plan, beat European buyout firm CVC Capital Partners to acquire UK’s national lottery operator, Camelot, in a $576 million deal. And last year, Borealis partnered with Manchester Airports Group to bid for the UK’s Gatwick airport.

According to the WSJ, the winning bidder for the he 68-mile High Speed 1, or HS1 Ltd., which cost about $9.5 billion (£6 billion) to build and opened in November 2007, will receive a 30-year concession to the line between London and the Channel Tunnel.