Railtrack share campaign begins with pounds 1.8bn hopes

The advertising campaign to market shares in Railtrack, which owns Britain's railway lines, gets under way tomorrow, as expectations of the likely price edge up to more than pounds 1.8bn. This compares with earlier estimates that Railtrack would fetch no more than pounds 1.5bn because of uncertainty about its earnings record and about the impact of Labour policy on the privatised company.

Last week there were signs that Labour was softening its policy of maintaining a publicly owned and accountable railway, as evidence mounts that the sale programme is well past the point of no return.

The chances of Labour renationalising Railtrack or taking control by a back door appear to be receding rapidly.

The Railtrack sale, due in May with the pathfinder prospectus to be published next month, will take privatisation past the halfway mark, measured by turnover, and the Government is making strenuous efforts to remind potential investors of how far it has got.

With a third of the rail industry - pounds 3bn by turnover in 42 businesses - already transferred to the private sector, Railtrack will take the total privatised turnover to more than pounds 5bn.

The Government has sold franchises covering 20 per cent of the passenger services, by revenue, and another 30 per cent is on the market. It has also raised pounds 1.8 bn in cash by selling the three rolling stock leasing companies.

Six infrastructure maintenance and track renewal companies have been sold, as well as six heavy maintenance depots and a large number of other smaller companies including 12 central services businesses.

Final bids for Freightliner are in, and the sale is due shortly, while Red Star, Rail Express Systems and the trainload freight companies have been sold.

Advisers are aiming to sell 30 per cent of Railtrack - about pounds 600m of shares - to private investors, but there is no upper limit and if the marketing campaign goes well the proportion could reach 40 per cent.

The campaign is not seeking out a mass market for Railtrack shares because of the relatively small size of the privatisation. When Railtrack is quoted it will fall at the bottom end of the FT-SE 100 and may be outside it.

The television and newspaper advertising campaign will feature pictures of railways lines alone, without trains running on them, to avoid misleading the public into thinking that Railtrack shares represent an investment in trains. Railtrack is an infrastructure company that charges rail operators for the use of its track. Presentations to institutional investors have been under way for some time.

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