Government raises pounds 144m from BAA sale

RUSSELL HOTTEN

The Government yesterday raised pounds 144m after selling its remaining stake in BAA, the airports operator, as part of a gradual disposal of its holding in privatised companies.

The Treasury sold the 2.86 per cent stake to Merrill Lynch for about 490p after a secret City auction for the business organised by NM Rothschild.

Dealers said Merrill placed the 29.5 million shares with several institutions at about 494p. BAA shares closed 1p lower at 495p.

The Government's sale had been expected since it indicated last year that it had asked Rothschild to divest the remaining post-privatisation shareholdings.

The sale of a block of British Petroleum shares worth pounds 180m in December marked the start of this process.

The sales will continue with the disposal of a 14 per cent interest in Mersey Docks & Harbour Company and shareholdings in the privatised water and electricity companies and generators.

Labour Party critics have accused the Government of "selling off the family silver" to pay for tax cuts in advance of the next general election.

Rothschild was commissioned last year to sell a share portfolio of 34 government "bin-ends" worth more than pounds 1.2bn, of which BP was the first and largest. The BP sale was claimed to be the largest bought deal of its kind in the City and used a rarely-employed procedure.

It is thought that Rothschild invited securities firms to its offices after the markets had closed and kept each team separate while they bid for the BAA business.

They were given little advance warning of the details of the sale, other than that they would be called upon to commit a large amount of cash.

Meanwhile, yesterday the chairman of BAA, Gordon Edington, warned that the world's airports faced a massive funding shortfall to meet the huge demand for investment in facilities.

Speaking at a conference, he said that the funding gap - $50bn in the US alone over the next five years - could only be bridged by private sector finance as local authorities would not have the money.