Taxpayer gets less than one third back in Eurostar sale

Sale of the government’s 40% stake in Eurostar for £757.1m in March represented value for money and was well managed according to the National Audit Office. But the NAO also noted that the proceeds fell far short of the £3bn of taxpayers’ money invested in the project.

The 40% stake was acquired by the Anglo-Canadian investment consortium, Patina Rail Ltd, for £585.1m, and was higher than the government’s own valuation of £305m; Eurostar paid £172m to redeem the UK government preference shares in a separate transaction.

The NAO says the sale was, “driven by the desire to sell prior to the 2015 general election.” Eurostar has been profitable since its incorporation as a company in 2010 and the first dividend is due this year. The government decided against delaying the sale pending the introduction of new rolling stock in 2017 (which would have enhanced profitability). By selling the preference shares the government has also foregone £243m that was expected to be paid out over the next decade.

However, government advisers were concerned that future profitability could be eroded by rival on line competition which is due to start before 2025.

Transaction costs amounted to £8.2m (1.1%) of the sale, and legal costs came to £0.5m.

685/Nov 15

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