From over the `Chinese wall'

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The Independent Online
BY DAVID HELLIER.

SBC Warburg's "dawn raid" on South Western Electricity took place just one working day after its research team gave institutional clients a less than enthusiastic verdict on the sector in the light of Professor Littlechild's new price regime.

The bank's highly-rated research team has been bearish on the electricity sector, and on most other utilities, for some time.

Its latest research on electricity, dated July 7, says that Professor Littlechild's pricing review comes in "at the very tough end of brokers' projections".

The note adds that the RECs have been "turned into relatively dull utilities at last" and says that their upside for the investor ranges from 4.1to 6.9 per cent. In fact SWEB's shares rose 13 per cent after yesterday's raid from the other side of the "Chinese wall" by Warburg's corporate finance team.

The research note does not dwell on the possiblity of takeover activity in the sector, which has sustained many of the RECs' share prices since last week's price review.

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