Lancashire pension fund Eurostar bid hits buffers

LANCASHIRE County Council Pension Fund has confirmed that it will continue to seek out good investment opportunities after it lost out in its £300m bid for the Government’s stake in Eurostar.

It has been confirmed the Government’s chunk of the channel tunnel company is to be sold to a consortium of British and Canadian pension and infrastructure funds, to the tune of £760m.

Chancellor George Osborne said it was “a fantastic deal” for taxpayers and that the money would be used to draw down debts on infrastructure.

It means Caisse de depot et placement du Quebec (CDPQ) and Hermes Infrastructure will take the Government’s 40% holding for £585.1m. Eurostar will redeem the Government’s preference share, raising a further £172m.

The bid by Lancashire was the only solely UK–based bid to make it through to the final stages of the process.

Speaking after the Government announced the outcome of the Eurostar bidding process, David Borrow, deputy leader of Lancashire County Council, and holder of the finance portfolio, said: “We’re continually seeking secure investment opportunities that will ultimately benefit the pension fund and taxpayers alike.

“Eurostar was an attractive proposition because it is a sizeable yet secure long-term investment – the service is very reliable, demand is strong and there’s reason to believe those things will hold true into the future.

“We’re disappointed not to have won the bidding process but it’s very clear our bid made it down to the final stages of discussion and that we were competing effectively with bids from around the globe.

“Despite the obvious appeal of Eurostar as an investment, the Lancashire County Pension Fund bid may have been seen as a surprise of sorts – the fact is that the county council, which manages the fund, is leading the way in local government when it comes to securing its investments.

“We have for a long time had the scale of investments required to be in this kind of process, but only over recent years have we developed the expertise to know whether and how to go about it.

“Our strategy on investments is first and foremost to ensure the security of our assets which, as events such as Lehman Brothers and the Icelandic banking crash proved in the last decade, doesn’t mean simply putting money in the bank.

“We’ll continue to seek out the most secure investment opportunities we can find for the benefit of our local communities and members of the pension scheme.”

The Lancashire fund, which administers pensions for thousands of council workers, bid for the stake when it was put up for sale by Eurostar in autumn as part of a plan to raise £20bn from asset sales by the end of the decade.

Launched in 1994, Eurostar has enjoyed a surge in demand with in excess of 10 million passengers travelling on its trains in 2013.

Other bidders included private equity firm 3i, a division of French bank Credit Agricole and an arm of the Singapore government.

The rest of Eurostar is owned by  owned by SNCF, the French state-owned rail operator, which controls 55%, and the Belgian government which has 5%.