HOW TO GET THE FINANCE

This paper discusses why British banks and investors seem likely to finance rather little of the privatisation of British Rail (BR). Most of the railway franchises seem unlikely, even potentially, to be profitable in their own right, so that lenders are really faced with the question of the minimum level of subsidy that the Government must pay to ensure acceptable passenger services. This raises the further question of whether there is need or scope for private funding, because it seems likely that the Government will be paying franchisees to take over BR's previous train operations. Nevertheless, the author surveys what project or finance lenders would seek when considering the provision of finance. He also examines some other UK privatisation exercises (telecommunications, water and electric power), and considers why they have been able to attract loan finance and equity investment. Finally, he assesses the part that private sector finance could or should play in rail privatisation, and draws some conclusions about probable outcomes. For example, it seems unlikely that project finance banks will play a major part in the operation of franchises, though they could be rather more interested in management buy-outs. Some financing of specific rail capital projects could be appropriate. For the covering abstract see IRRD 865967.

  • Corporate Authors:

    IBC LEGAL STUDIES AND SERVICES LTD

    57-61 MORTIMER STREET
    LONDON,   United Kingdom  W1N 7TD
  • Authors:
    • BARRY, J T
  • Publication Date: 1993

Language

  • English

Media Info

Subject/Index Terms

Filing Info

  • Accession Number: 00668316
  • Record Type: Publication
  • Source Agency: Transport Research Laboratory
  • Files: ITRD
  • Created Date: Nov 2 1994 12:00AM