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Swedish fund set to buy GB Railfreight

Groupe Eurotunnel is pulling out of the British rail freight market
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Eurotunnel Group (GET) has confirmed that it has received a binding and irrevocable offer from Swedish private investor fund EQT Infrastructure II to acquire the whole if its subsidiary, GB Railfreight (GBRf), the third largest rail freight operator in the UK.

The offer will shortly be presented to the Group’s staff representative bodies for consultation. The transaction would give a new direction to GBRf, which was created in 1999, based on the quality and commitment to development of the EQT group.

GET acquired GBRf in 2010 for £25M (at an exchange rate of £1=€1.17) and has more than doubled its activities, leading to forecast revenues of around £125M whilst at the same time significantly improving its profitability. The Internal Rate of Return for the same period, from 2010 to 2016, estimated at the time of the potential sale, is just above 28%.

The Group’s French rail freight activities, managed by Europorte in France, are not included in the offer received. "Europorte France will remain focused on its own development to deliver constantly improved customer service, with the goal of becoming the foremost private rail freight operator in France," stated GET.

GET says the sale of GBRf would allow it to develop its core infrastructure and transport business, particularly through the delivery of the ElecLink electrical interconnector project, for which the construction works are now getting under way.

GBRf was founded in 1999 by CEO John Smith and subsequently sold to Anglia Rail, which in turn sold it to GET. Currently its team of 650 people operates over 1000 trainloads a week, moving around % of UK’s rail freight. GBRf has a fleet of over 130 locomotives and 1100 wagons, transporting goods for customers including Drax, Network Rail, EDF Energy, Aggregate Industries and Tarmac, as well as container traffic over Felixstowe (mainly for MSC).

However, the continued uncompetitiveness of through tunnel rail freight vis-à-vis GET's freight shuttles, the Dover Straits ferry companies and unaccompanied North Sea multimodal services means that the hoped-for synergies between GET, Europorte and GBRf never materialised.

EQT's other transportation assets include Swedish rail freight operator Hector Rail AB and DCLI, one of the biggest chassis providers to shipping lines in North America.

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