3i Infrastructure plc announced it has agreed to sell its entire stake in Eversholt Rail Group , one of the three leading rail rolling stock companies in the UK, to CK Investments S.A R.L., a company jointly owned by Cheung Kong Infrastructure Holdings Limited and Cheung Kong (Holdings) Limited, (together, “CKI”).
The sale of the investment will generate estimated proceeds of approximately £358 million (subject to completion adjustments and excluding certain transaction costs) for 3i Infrastructure. In addition to these proceeds, which include £5.9 million of interest receivable, 3i Infrastructure received a distribution of £15.5 million from Eversholt Rail in December 2014. The valuations of Eversholt Rail were £240.8 million at 30 September 2014 and £160.3 million at 31 March 2014.
3i Infrastructure acquired its interest in Eversholt Rail in December 2010 as part of a consortium with Morgan Stanley Infrastructure Partners and STAR Capital Partners with its co-investor PGGM. All of the investors in Eversholt Rail have elected to sell their entire interest in Eversholt Rail to CKI. The enterprise value of the transaction is approximately £2.5 billion. Completion of the transaction remains conditional upon receiving clearance from the European Commission under the EU Merger Regulation and it is anticipated that the transaction will close in March 2015.
Eversholt Rail owns approximately 28% of the current UK passenger train fleet. Its 19 fleets, predominantly weighted towards electric trains, are leased to 11 Train Operating Companies. Eversholt Rail also owns a fleet of freight locomotives.
Over the past four years, the consortium has worked closely with the management team to establish Eversholt Rail as a successful independent company. The consortium has supported the business in its re-franchising programme and in assessing a range of capital investment opportunities, both to add further trains to the overall fleet and to invest in upgrading existing assets to provide better passenger experience and improved reliability, at good value for money for customers.
In addition, the consortium optimised the company’s capital structure through the issuance of three long-dated public bonds totalling £1.1 billion in December 2010 and March 2011, a private placement of £150 million in December 2012 and two further bank refinancings in November 2013 and November 2014, on attractive terms.