Sid gets 10p off rail shares

Small investors who apply for shares in Railtrack are expected to be offered a discount of 10p a share against the price paid by large institutional investors.

Around 1.4 million people had registered interest in the flotation by Tuesday. The figure could rise to about 1.6 million by the deadline tomorrow evening.

SBC Warburg, the Government's adviser on the flotation, is expected to announce that while small shareholders will pay 190p a share for the first instalment on the two-stage share issue, institutions will pay 200p.

The discount is on top of other perks, in particular a controversial bonus dividend to be paid out of profits generated when Railtrack, the operator of track and signalling, was in the state sector. The flotation is the centrepiece of complex plans to privatise the railways.

Advisers on the sale meet this weekend to decide an indicative price range for the sale. The fully paid shares are expected to be priced in the range of either 330p-390p or 340p-400p. They will take into account the buoyancy of the stock market and the apparent appetite from institutional investors.

Bob Horton, chairman of Railtrack, takes his investor roadshow to North America tomorrow with presentations planned for the West Coast, Mid West, Boston, the Bahamas, Chicago and New York. US investors are expected to buy 10 to 15 per cent of the shares.

The prospects for the flotation are so far good. If only 30 per cent of people who register end up applying for shares - a conservative figure by historical standards - and if they apply for an average of pounds 2,000 worth, then the public offer of one-third of the shares would be subscribed twice over.