Goldman, Morgan Stanley and Allianz in rail bids - sources

AMSTERDAM/LONDON Fri Oct 29, 2010 6:12pm BST

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AMSTERDAM/LONDON (Reuters) - Bid teams based around Eurotunnel and Goldman Sachs (GS.N), Morgan Stanley (MS.N), German insurer Allianz (ALVG.DE) and two Ontario pension funds offered to buy Britain's only high-speed rail route, sources said.

The four teams are vying to run the 186-mph (300km per hour) route from London to the Channel Tunnel, known as High Speed 1 and which market sources say could fetch 2 billion pounds.

A spokesman for London and Continental Railways (LCR), High Speed 1's parent company, confirmed binding bids were due on Friday but declined to comment further.

A spokesman for Eurotunnel and Goldman's team said: "I can confirm the GB Speedrail consortium has today submitted a bid for High Speed 1."

The so-called GB Speedrail group comprises Goldman Sachs Infrastructure Partners, Groupe Eurotunnel (GETP.PA), fund manager M&G's Infracapital arm, Britain's Universities Superannuation Scheme (USS) and the infrastructure arm of France's Caisse des Depots et Consignations (CDC).

The most recent bidder to emerge is Allianz (ALVG.DE), which two sources familiar with the matter said has teamed up with Britain's largest private pension fund, the BT (BT.L) Pension Scheme, and Canada's Public Sector Pension Investment Board (PSP).

JOINT BID

PSP manages the pensions of Canada's civil servants, armed forces and the Royal Canadian Mounted Police, or Mounties. It manages more than 50 billion Canadian dollars (30 billion pounds) of assets.

Among the remaining bidders, Morgan Stanley Infrastructure, 3i Infrastructure Plc (3IN.L) and the Abu Dhabi Investment Authority were also planning to submit a joint bid on Friday, as were Borealis and the Ontario Teachers' Pension Plan, people close to both bidding groups said.

Borealis is the infrastructure investment arm of Ontario Municipal Employees Retirement System (OMERS).

3i, Allianz, BT pension fund manager Hermes, Morgan Stanley, PSP and Teachers declined to comment. ADIA and Borealis did not immediately respond to requests for comment.

Another early suitor, Li Ka-Shing's Cheung Kong Infrastructure (CKI) (1038.HK), has dropped plans to bid, two people familiar with the matter said. The Hong Kong billionaire spent $9 billion on UK electricity networks this year.

The sale was initiated by the previous Labour government but would mark the first privatisation since a Conservative-Liberal Democrat coalition took power in May.

The coalition has vowed to reduce the debt pile and slash a budget deficit that will reach about 150 billion pounds this year.

The Adam Smith Institute, a right-wing think tank, has called for a wave of further asset sell-offs including water companies, ports, the Royal Mail and broadcaster Channel 4.

It says excluding the state's stakes in three banks, these sales could fetch 32 billion pounds.

(Editing by David Hulmes and David Holmes)

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