CINMan sale `netted only half value'

THE pounds 49M privatisation of CINMan - the former British Coal subsidiary that manages pounds 18bn worth of mineworkers' pension funds - was criticised yesterday in a National Audit Office (NAO) report which showed that the sale netted only half the potential proceeds.

The NAO also attacked the squabbling between the Department of Trade and Industry, British Coal, the trustees of the pension schemes and the CINMan management.

These conflicts delayed the completion of the sale for almost a year and resulted in sale costs of pounds 7.7m - equivalent to one-sixth of the total proceeds raised by the privatisation. The sale of the business, in three parts, took 18 months to complete and raised pounds 48.9m before tax and costs.

CINMan was put up for sale as one business in April 1995, but one month later the entire management of its venture capital division, CINVen, threatened to resign unless it was sold separately.

CINVen was ultimately sold to a management buyout for pounds 6.74m in November 1995.

In the same month the trustees of the two pension schemes blocked the sale of the main part of the business to Friends Provident for pounds 75.5m, even though it was backed by British Coal and by half of the CINMan management.

The business was then split into two parts - one managing the funds tied up in securities, the other managing its property interests. The securities business was eventually sold to Goldman Sachs Asset Management for pounds 32.5m, while the property arm was bought by La Salle Partners for pounds 9.7m.

In his report, the Comptroller and Auditor General, Sir John Bourn, says potential conflicts of interest between different parties should have been resolved before the sale got under way.

He says these prevented a clean-cut sale and also prolonged the sale process itself. "This uncertainty and delay meant that the costs of the sale were higher than if there had been greater clarity of objectives, with the full agreement of all parties from the start."