Private investors had been promised a minimum of 30 per cent of the pounds 1.95bn flotation. But advisers believe that with as much as pounds 1.2bn of private cash chasing the shares interest should be strong enough to raise the allocation to between 45 and 50 per cent.
A big increase in the retail offer would underline Government claims that the flotation is a success, despite the barrage of bad publicity and threats by Labour that if it gets into power it will reduce the profitability of the privatised owner of the rail network. Ministers are likely to say that the level of interest in Railtrack by the public confounds the critics.
At the minimum level of a 30 per cent allocation of the shares, retail investors would receive less than pounds 600m worth and their part of the offer would be twice subscribed.
There are already indications that the institutional offer is more than four times subscribed, and considerably more if the allocation is cut back to make way for retail investors.
At these levels of demand the price is certain to be fixed at or near the top of the 350p to 390p a share range on Friday evening, when the institutional sale is finalised. Private investors will receive a 10p- a-share discount on the institutional price.
There are likely to be intense discussions among Government advisers about the exact levelwhich the retail allocation of shares be raised to, which will depend on how far they think the institutional offer can be squeezed back without offending international investors.
If the institutions' allocations are restricted and they are short of stock, it could give a boost to the price when trading starts next Monday, which will give the Government more ammunition in the slanging match with Labour over whether Railtrack is a good deal for investors.
The exact number of applications has yet to be determined but with more than 500,000 counted last night there were expectations of a total in the region of 550,000. Applications look set to be a little over a quarter of the 1.9 million who registered in advance for special discounts.
On past privatisation experience, average applications are likely to be a little above pounds 2,000.Reuse content