Personal greed and social conscience will clash shortly when Railtrack is privatised, and the chances are that personal greed will win again. It is the first "primary" privatisation since 1992, which means that for the first time in four years there are no shares already being traded to act as a drag on the market, so there is a genuine opportunity for the stags to make a quick profit.
If the political spin-doctors are to be believed, Railtrack will be sold off at far below the value of the assets in a desperate attempt to present investors with an irresistible bargain sufficient to overcome widespread public doubts about the wisdom of breaking up the rail system, and at the same time present an incoming Labour government with a fait accompli.
But Jeff Plowman, managing director of Dealwise, the low-cost share broker, thinks Railtrack, like BAA, is a good investment in its own right. It has a mass of assets including stations with development potential and an income flow from the train operators, which carry the brunt of public dissatisfaction and the risks of competition from road transport.
As usual, only 30 per cent of the shares sold are reserved for private investors, though the Government will increase the allocation if public interest is sufficient. The actual price of the shares and the likely profit and dividend forecasts will not be available until next month. But barring some sort of debacle, the chances are that Railtrack will be sold off cheap, private investors will be allocated up to 60 per cent of the shares sold, and institutional investors will have to top up their holdings buying in the market, especially as Railtrack is expected to be included in the FTSE 100 share index, which means tracker funds will be obliged to invest in it.
Private investors will be entitled to incentives and preference in the event of demand for shares exceeding the availability only if they register with (and buy through) a share shop (run by 110 different banks, building societies, brokers and financial intermediaries). Share shops have already begun accepting registrations, and this time round the sharpest operators will be allowing investors who buy through them to sell by telephone as soon as trading begins instead of waiting until their share certificates arrive.
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