Korean investors may own half of UK high-speed railway after UK firms’ resale

  • 2017-08-29

170829-hs1After the National Pension Service (NPS) agreed to buy a 30% stake in Britain’s High Speed 1 (HS1) for around 400 billion won ($355 million) in July, other South Korean institutional investors are set to acquire an additional stake in the railway line from UK-based investment firms for 175 million pounds ($227 million).

Once the investment is completed, their combined ownership in the UK’s only high-speed rail line will likely reach 50%, according to investment banking sources on August 29.

A consortium of Equitix Investment Management Ltd., HICL Infrastructure funds of InfraRed Capital Partners and NPS signed an agreement last month to acquire 100% of HS1 for 914 million pounds from two Canadian pension funds. The deal valued the loss-making railway line at more than 3 billion pounds, including debt.

Now Equitix is reselling part of its 35% stake in the 109 km railway line to both Hyundai Marine & Fire Insurance Co. Ltd. and Hanwha General Insurance Co. Ltd. for 75 million pounds. The two Korean insurers will buy the shares in co-investment.

Other South Korean investors, led by NongHyup Cooperative Banking Depositor Protection Fund, will buy an equity stake in HS1 for 100 million pounds from Hana Financial Investment Co. Ltd. They are investing through a fund of Hana which underwrote 100 million pounds of shares in HS1 from a fund run by InfraRed Capital.

HS1 manages the rail line that connects St. Pancras station in London and the Channel tunnel to France under a 30-year contract through 2040. It owns four stations along the route and Eurostar trains run on the line.

The InfraRed-led consortium won the auction for the UK high-speed railway line over another bidding group which includes Dalmore Capital Ltd., Amber Infrastructure Group and Dutch Infrastructure Fund B.V.

With competition for infrastructure assets soaring from global asset owners, South Korean pension funds are finding it more difficult to snap up infrastructure deals in the second half of this year than in the first half. This may set back their plans to boost infrastructure investments this year, according to Yonhap Infomax.

By Daehun Kim

daepun@hankyung.com

<Edited by Yeonhee Kim>