STORY UPDATED: 10.58
THE Treasury has sold its 40 per cent in Eurostar for a higher price than was expected.
Industry insiders had speculated that the sale could raise £350 million, but the price is more than twice as much. The RMT has condemned the sale as a 'pre-election betrayal'.
The Treasury said it would receive £757.1 million for selling its share of Eurostar to a consortium of Caisse de dépôt et placement du Québec and the British investment fund Hermes Infrastructure.
Caisse de dépôt et placement du Québec is reported to have bought 75 per cent of the British share, or 30 per cent of Eurostar as a whole, while Hermes is taking the rest.
The consortium will pay £585.1 million, but another £172 million has been raised because Eurostar has agreed to redeem the Government's preference share for another £172 million.
The sale is part of the Government's ambition to raise £20 billion from corporate and financial asset sales by 2020, as set out in the Autumn Statement and National Infrastructure Plan in 2013.
The Treasury said that 'government’s key objective in the transaction was to maximise value for money for the UK taxpayer, and this has been achieved'.
It also agreed that the price is 'significantly ahead of expectations, reflecting the high quality nature of the asset'.
Eurostar has been doing well in recent years, and now carries more than 10 million passengers annually. It will be placing the first of 17 new 320km/h Siemens Velaro trains in service this December, and adding a new route between London and Amsterdam at the end of 2016.
Founded 50 years ago, CDPQ is a long-term institutional investor that manages funds primarily for 33 public and para-public pension and insurance plans, while Hermes Infrastructure, part of Hermes Investment Management, is a UK-based fund managing approximately £3 billion.
The Chancellor George Osborne said: "It’s great that we have reached an agreement to sell the UK’s shareholding in Eurostar that delivers a fantastic deal for UK taxpayers that exceeds expectations. Investing in the best quality infrastructure for Britain, getting the best value for money for the taxpayer and tackling our country’s debts are key parts of our long term economic plan, and in today’s agreement, we are delivering on all three."
The announcement has angered the RMT union, which argued that the Government should keep its share of the international operator.
RMT general secretary Mick Cash said: “The news today that the Government has reached a deal to sell off the British slice of our cash-generating Eurostar assets before the May election is pure Thatcherite industrial vandalism that makes us a laughing stock across Europe.
"The Eurostar sell-off is a gross act of betrayal of the British people by a right wing government hell bent on selling off the family silver regardless of the real cost.
“The French and Belgians think we are insane. The Eurostar sell off is just another short sighted, pre-election act of public sector destruction based on a bankrupt pro-privatisation ideology coming hot on the heels of the East Coast hand over to Virgin/Stagecoach.”
However, the deal is not yet done. It will be subject to regulatory approval, and Eurostar's other owners, the national railways of France and Belgium, also have the right to intervene by buying the British stake for a 15 per cent premium.