Huge financial deal for Tallinn tunnel project

Chinese investment firm signs memorandum of understanding for €15 billion costs of digging from Tallinn to Helsinki.

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Peter Vesterbacka presents an update to his tunnel project at a public meeting in Tallinn, February 2019 / Credit: News Now Finland

Businessman Peter Vesterbacka  has secured a memorandum of understanding for a huge €15 billion financial deal to fund a proposed tunnel linking Helsinki Airport and Tallinn Airport with a high speed rail connection.

The money covers the full estimated costs of the construction project including infrastructure such as trains, and comes from Chinese investment company Touchstone Capital Partners.

One third of the new money comes to Vesterbacka’s Finest Bay Area Development Oy company as private equity investment, and two thirds comes as debt financing.

Vesterbacka tells News Now Finland the deal has been two and a half years in the making.

“The Tallinn Tunnel is one of Europe’s largest infra projects and it will require close
collaboration between the project consortium and the public sectors of Finland and Estonia. We are very fortunate to have very effective and transparent public actors in both nations, and we look forward to open and active partnership with all parties” says the 50-year old businessman.

Detail from a map showing tunnel rail connections in Finland / Credit: FinEstBay

Funding grows as architecture partners get on board

The latest announcement comes in addition to a €100 million investment from a Middle Eastern company previously announced last December.

In February, international firm Zaha Hadid Architects emerged as a front-runner to design some of the stations for the tunnel project, adding new prestige to the plans.

Details of the latest Chinese investment will be worked out over the next six months, with Vesterbacka still planning to open the 100km tunnel in December 2024.

“We are very pleased with the negotiations and the agreement reached. Touchstone has extensive experience in financing similar large private infrastructure projects” says Finest Bay Area Development’s Kustaa Valtonen.

“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” Valtonen adds.

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Building a tunnel to link two capitals 

The proposed train link will whisk passengers from Helsinki to Tallinn at speeds of 300km in just 20 minutes.

The tunnel would be built underground the whole way, with terminus stations at Helsinki and Tallinn Airports, and intermediate stops at a new purpose-built island in the Baltic Sea off the coast of Finland, and plans for a new Keilaniemi stop in Espoo, the hub of the region’s international business community.

The route however is the subject of dispute. Helsinki’s Mayor Jan Vapaavuori (NCP) is insisting that any tunnel connection must come into Helsinki railway station, and has tried to block Uusimaa regional council efforts to consider any other option.

“Finns are skeptical and it’s the same in Estonia. Seeing is believing” Vesterbacka told News Now Finland in February.