HELSINKI– FinEst Bay Area Development said on Friday it had signed a memorandum of understanding for 15 billion euros ($16.8 billion) in financing with China’s Touchstone Capital Partners for its undersea train tunnel project linking Helsinki with the Estonian capital Tallinn.
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, it said.
“Financial details will be negotiated over the next six months,” FinEst Bay Area said in a statement. It had earlier estimated the total cost of the tunnel at 15-20 billion euros.
The firm raised the first external funding of 100 million euros from Dubai-based construction company ARJ Holding in December 2018 and is seeking European investors to join.
“Now, the financing is sorted and we can move ahead,” project leader Peter Vesterbacka, a former executive at the Angry Birds game maker Rovio.
Finland and Estonia have for years considered linking their capitals, which are divided by the Gulf of Finland. 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 tunnel would cut the travel time to around 20 minutes from the two-hour ride on a ferry now.
A feasibility study commissioned by the two governments and published in 2017 said the planned 100-km (60-mile) tunnel could open in 2040 but Vesterbacka reiterated that the tunnel would be built by the end of 2024. The tunnel project is yet to secure backing from the two governments and the European Union. “The long term vision for Finland includes that we can get through the tunnel to Tallinn,” Finland’s Prime Minister Juha Sipila said earlier this week during a visit to Estonia. ---