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 financing, which will be provided by China’s Touchstone Capital Partners Ltd., will cover the entire cost of the project, the tunnel company Finest Bay Area Development Oy said in a statement on Friday. A third of the funding will be made in the form of a private equity investment, giving Touchstone a minority stake, and two thirds are debt financing, according to the memorandum of understanding.
The planned tunnel between Helsinki and Tallinn will span more than 100 kilometers (62 miles) and entails the construction of at least one artificial island. The project was founded by Finnish entrepreneur Peter Vesterbacka, formerly of Rovio Entertainment Oyj.
The governments of Finland and Estonia have said they will work toward securing European Union funding for the tunnel, which could reduce the amount of private funding needed. Touchstone’s financing is available to Finest Bay Area Development in tranches as the project progresses, with financial details of the contract set to be negotiated over the next six months.
It’s not clear from the press release whether Touchstone has raised the money or committed to doing so.