China invests €15 billion in world’s longest undersea rail tunnel between Finland and Estonia
An ambitious train rail link, designed to connect the Finnish and Estonian capitals through the bottom of the Gulf of Finland, has attracted €15 billion ($17 billion) from China-owned Touchstone Capital Partners.
Finest Bay Area Development Oy inked a memorandum of understanding with the Chinese fund, which sponsors Beijing’s Belt and Road initiative, to provide funding for the Helsinki-Tallinn tunnel, the company announced on Friday. One-third of the €15 billion funding will come as a private equity investment, with Touchstone taking a minority share in the project, and the remaining two-thirds as debt financing.
The Chinese financing will be available to Finest Bay Area Development as the project progresses. The partners are to further agree on financial details of the contract over the next six months.
The 103-kiolmeter tunnel, designed to connect the Helsinki-Vantaa airport and the Tallinn airport with two stations in between, is one of Europe’s largest infrastructure projects, according to project leader Peter Vesterbacka.
“Touchstone has extensive experience in financing similar large private infrastructure projects,” co-founder of Finest Bay Area, Kustaa Valtonen, said. He added that the company is looking for “fully balanced financing solution” and aims to secure European, Nordic, and Finnish capital investments.
Earlier, the firm said that the tunnel will cost around €15 billion, and Touchstone’s help can fully cover the costs. Last year, Dubai-based construction company ARJ Holding agreed to provide €100 million funding for the train link, which is planned to cut the travel time to around 20 minutes from the two-hour ferry ride used by tens of thousands of commuters.
Though construction of the undersea tunnel has not started yet and it is not scheduled to be operational until 2024, tickets for the ride have been available since December. A one-way ride will cost passengers €50, while an unlimited annual subscription voucher is being sold for €1,000.
Beijing has been investing in multiple projects around the world via its multi-trillion-dollar Belt and Road Initiative (also known as the One Belt and One Road Initiative). The project aims to boost connectivity and cooperation between East Asia, Europe, and East Africa.