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Tallinn-Helsinki rail tunnel secures 15 billion euros of funding

FinEst Bay Area Development has announced that it has secured 15 billion euros in financing from China’s Touchstone Capital Partners for an undersea train tunnel project linking the Estonian capital Tallinn with Finnish capital Helsinki.

One-third of the funding will come as a private equity investment – giving Touchstone a minority stake in the project – and two-thirds will be debt financing, FinEst said.

“Financial details will be negotiated over the next six months,” FinEst Bay Area said in a statement.

“We are very pleased with the negotiations and the agreement reached. Touchstone has extensive experience in financing similar large private infrastructure projects,” said Kustaa Valtonen, a founding partner of FinEst Bay Area Development. “Our goal is to also secure European, Nordic and Finnish capital investments in addition to the already agreed financing arrangement. We are looking for a sustainable and fully balanced financing solution for the project.”

In December 2018, FinEst secured 100 million euros from Dubai-based construction company ARJ Holding, its first external funding commitment for the project.

“Now the financing is sorted we can move ahead,” project leader Peter Vesterbacka, a former executive at the Angry Birds game maker Rovio, told Reuters.

Finland and Estonia have for years considered linking their capitals, which are divided by the Gulf of Finland. The tunnel would connect Finland to the standard-gauge Rail Baltica project connecting the three Baltic States with Poland and the western Europe standard-gauge network.

Tens of thousands of Estonians work in the Helsinki area, making the weekly commute by sea, while Tallinn is a popular tourist destination for Finns. A rail tunnel would cut the travel time to around 20 minutes from the two-hour ride on a ferry travelers are currently required to take.

Mr Vesterbacka is hopeful that the tunnel will be operational by December 24, 2024.