Daily Management Review

UK Government’s Stake in King’s Cross to go Under the Hammer


08/17/2015




UK Government’s Stake in King’s Cross to go Under the Hammer
As the sell-off of state assets gathers pace in the UK, the government is all set to sell off the taxpayer’s stake in London’s King’s Cross development.

The taxpayers hold 36.5% stake in the King’s Cross Central Partnership.

The government has been developing the site through a private group that is building up offices, shops, colleges, homes and parks in the 27-hectare (67-acre) site and is expecting to raise £360 million from the sale, sources at the Office for Budget Responsibility (OBR) said.

It is estimated that the combined value of the entire estates, the largest city-centre development in Europe, is estimated to be more than £5 billion after the development work is completed in the next five years.

The government aims to transform the once-dingy streets around King’s Cross station into a modern day buzzing area that would have arts venues and hipster bars and coffee shops. After roping in the University of the Arts London, the government also hopes to include Google in the project.

According to the impressive development plan, the site would have 5.8 million square feet of office space, apartments and shops distributed among 50 new and refurbished buildings. The development plan also includes the construction of 20 new streets, 10 new parks and squares and three new bridges and walkways over Regent’s Canal.

Apart from the government’s stake, the logistics firm DHL will also sell its 6% stake in the King’s Cross estate. The other stakeholders in the estate include the pension provider AustralianSuper with a 25% stake and the Argent King’s Cross, the estate’s asset managing firm that is working with Hermes Investment Management, with a share of 32.5% in the estate.

The UK government has set their eyes on raising £64 billion through the privatization route and the sale of the government’s stake is just a small part of the overall plan.

The government is looking to raise the money by privatization of the student loan book that is valued at £12 billion, the nuclear fuel processor Urenco and 15% stake at the Royal Mail.

The sell-off has already begun, with biggest assets of the taxpayer’s stakes in the bailed-out Royal Bank of Scotland worth £23 billion and the Lloyds worth £13 billion. The taxpayer has already recorded a loss of £ 1 billion loss on RBS. 

According to the OBR, the government’s fiscal watchdog, £32 billion from privatization is hoped to be raised in 2015 while a remainder of £32 billion is hoped to be moped up by the end of the current parliament in 2019-20.

“By selling the government’s shares in King’s Cross Central we are selling an asset we no longer need to keep and realising its value to the taxpayer. The sale will help reduce the deficit and by doing so deliver lasting economic security for working people,” said the transport minister, Robert Goodwill while announcing the sale of King’s Cross.

(Sources: www.reuters.com & www.theguardian.com)
 






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