FinEst Bay Area Development signed a memorandum of understanding for EUR 15 billion in financing with China’s Touchstone Capital Partners for an undersea train tunnel project linking Helsinki with the Estonian capital Tallinn. FinEst Bay Area raised the first external funding of EUR 100 million from Dubai-based construction company ARJ Holding in December 2018 and is seeking European investors to join.

Under the memorandum, 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.

“We are very pleased with the negotiations and the understanding we have reached. Touchstone has wide experience of financing similar big privately funded infrastructure projects,” said Kustaa Valtonen from Finest Bay Area. Financial details will be negotiated over the next six months.

“Now, the financing is sorted and we can move ahead,” said project leader Peter Vesterbacka.

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.

Sorainen team led by partner Paul Künnap and Senior Associate Sandra Mikli is advising FinEst Bay Area Development in issues related to Estonian law.