Abu Dhabi fund joins Morgan Stanley to bid for UK Channel Tunnel rail link

Abu Dhabi Investment Authority (ADIA), the sovereign wealth fund of the emirate, has agreed to join Morgan Stanley and private equity firm 3i, to bid for the auction of the Channel Tunnel high-speed rail link that is expected to link London with the Channel Tunnel.

The Abu Dhabi's National newspaper, citing a source close to the sale process, said yesterday that ADIA, the world's largest sovereign wealth fund, is in "very early stages" regarding its participation in the bid.

High Speed 1 (HS1), which owns the railway stations and track connecting London with the Channel Tunnel, could command a price of between £1.5 billion and £2 billion, according to analysts.

The sale of the 110-km High Speed 1 (HS1) line, which will link central London to the Channel Tunnel to France, will be the first major UK transport infrastructure sale since airport operator BAA sold London's Gatwick airport late last year to Credit Suisse and General Electric promoted US-based investment fund Global Infrastructure Partners (GIP).

The HS1 has been earmarked for privatisation by successive UK governments and the present coalition government run by David Cameron gave its nod for the sale.

The deadline for submitting bids is 17 August and the Morgan Stanley consortium will have to face competition from another consortium led by Channel Tunnel operator Eurotunnel, which has Goldman Sachs and Infracapital as partners.

ADIA has shown interest in UK's infrastructure assets. It bought a 15 per cent in London's Gatwick Airport for £125 million in February 2010 from GIP. (See: Abu Dhabi wealth fund to acquire 15-per cent stake in Gatwick airport) 

ADIA had also unsuccessfully bid for EDF's UK electricity networks business, which was won by a consortium led by Hong Kong billionaire Li Ka-Shing late last month. (See: Li Ka-shing consortium to buy EDF's UK arm for $9.1 billion)