Comment: Long haul ahead for high-speed rail link

Just as investors are recovering their nerve after the fire in the Channel Tunnel, another bunch of railway enthusiasts are preparing to bring their train set to market. Early next year London and Continental Railways, the Eurostar operator, will begin softening up City institutions and banks for a capital-raising exercise to fund the pounds 2.8bn high-speed rail link.

Don't be fooled, however, by that pounds 2.8bn figure, which is just the capital cost. Eurotunnel provided a wondrous insight into just how crippling compound interest can be. When the high-speed line is up and running, in theory by 2003, it will be remarkable if there is any change from pounds 4bn (at 1995 prices). That seems a fancy sum for slicing 35 minutes off the journey time to Paris and Brussels.

There are some important differences, however, between LCR and Eurotunnel. For one thing, LCR already has pounds 1.4bn of public funding in its back pocket after the Government's belated recognition that it would never get this project out of the sidings unless it dipped into taxpayers' pockets.

For another, LCR also has a sizeable income stream from Eurostar operations even though the chances of it actually turning a profit before flotation at the beginning of 1998 must be remote.

And for a third thing, it has the marketing chutzpah of Richard Branson's Virgin and the financial muscle of SBC Warburg behind it.

That said, the high-speed link will forever be linked - both physically and in the mind's eye of investors - with the Channel Tunnel, which came in a year late and twice the original budget and could, quite conceivably, never pay its original shareholders a dividend.

It will take all Mr Branson's pizzazz and all SBC's considerable financial ingenuity to pull this one off.