Railtrack rewards private investors

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Half the 500 million shares in Railtrack, far more than expected, will go to private investors when the Government announces the allocation and final pricing of the privatisation today.

Big City institutions will be scaled back from 70 per cent, despite subscribing 10 times over for their part of the issue.

The pent-up City demand will ensure that the shares jump to a healthy premium to the 190p issue price to small investors when they start dealing tomorrow, despite desperate efforts by Labour to undermine the offer.

This weekend, Clare Short, Labour transport spokeswoman, reiterated that Railtrack would come under closer scrutiny from a Labour government. Any sale of Railtrack's property holdings, she said, would have to see proceeds ploughed back into infrastructure investment. "The regulatory regime will also be more exacting," she warned.

On Friday, City bookmakers IG Index quoted opening prices for Railtrack shares of 213.5p, suggesting an instant profit for investors on Monday.

A spokesman for Railtrack said all the top 50 institutions in the UK had placed orders for stock in the book-building exercise carried out by SBC Warburg. "Demand from institutions was exceptionally strong," he said.

The price of the first instalment has been set at 200p for institutions and 190p for individuals. The fully-paid price will be set today, and the second instalment - due in June 1997 - is likely to come in at the top end of the 150p to 190p range, valuing Railtrack at pounds 1.95bn.

Railtrack received more than 650,000 applications from private investors, which covers the 30 per cent allocated to retail demand three times over.

The privatisation of other parts of the rail network continues apace. This week, the Government is expected to announce the sale of Freightliner, which handles freight arriving at deep-sea ports, to its own management. The management team MCB is backed by 3i and Electra and beat rival offers from P&O and Maersk.