Taxpayers are still short-changed in sell-offs: Comment

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Britain's experiment in privatisation is drawing to a close much as it began with a state-owned business sold off on the cheap and the investment community looking another gift horse squarely in the dentures.

Fourteen years ago, Amersham International, an obscure spin-off from the Atomic Energy Authority, first gave privatisation a bad name. The issue, surprise, surprise, was grotesquely underpriced, leading to massive over-subscription and a 37 per cent profit when dealings began for those lucky enough to have grabbed a slice of the action.

Today shares will begin trading in another spin-off from the Atomic Energy Authority, this time AEA Technology, after the offer closed seven-times subscribed. The scope for a first-day killing may not be as large as in past privatisations, given that the institutions are not being squeezed as severely as they have in the past to make way for the share-buying public. But the intermediaries - broking firms through which the public have had to apply for shares - will only get a fifth of the shares they applied for. That, together with an undemanding prospective earnings multiple of just over 14, should make the shares fly unless PDFM's Tony Dye suddenly gets what he has been praying for these past 18 months.

Amersham and AEA Technology are two businesses very similar in size. They both make a living from the commercial application of using skills and technologies honed in the nuclear industry. They are both staffed largely by boffins whose appreciation of commercial life, at the outset of life as quoted companies at least, is limited. In 14 years Amersham has transformed itself, proving what a handsome investment it was back in 1982. The shares have outperformed the Footsie by 200 per cent as sales and profits have increased seven-fold.

Over the same period, however, the Government's attitude to privatisation has hardly changed. True, the marketing is immeasurably more sophisticated and there is a little more effort to extract higher prices. You can argue that the efficiency gains in transferring state assets into the private sector have been enormous but you cannot argue that the taxpayer has been anything other than short-changed when the assets have physically changed hands. If there is one difference with AEA Technology, it is that none of the directors stands to make a killing from share options. Still that shouldn't matter too much to its chief executive, Peter Watson. He is sitting on a pounds 4m windfall from his other involvement in privatisation - the sale of Porterbrook.