Banks Vie To Get £200m Eurostar Sale On Track
Top City banks have begun competing to work on the sale of the Government's stake in Eurostar, the cross-Channel passenger service.
Sky News understands that the Department for Transport (DfT) and the Shareholder Executive, which manages state-owned companies, asked approximately half a dozen investment banks to pitch this week and next for the advisory role.
The appointment of a leading City firm will kickstart the process of selling the Government's 40% shareholding in Eurostar months after it finally met a long-standing target of carrying 10m passengers in a year.
In a statement issued to Sky News on Thursday, a DfT spokesman said: "It has always been the case that there is no long term intention for the UK Government to retain its stake in Eurostar."
"The department is seeking to appoint advisers to support our assessment as to whether a sale of the UK government shareholding in Eurostar would be value-for-money for the UK taxpayer."
The wording of the statement suggests that the sale could be shelved if it is deemed not to deliver a decent price for the Government.
Analysts believe the UK's stake in Eurostar may only be worth up to £200m, a tiny fraction of the estimated cost of HS2, the new high-speed rail link between London and the north of England.
The most likely bidder for the Government's shares is SNCF, the French state-owned rail operator which already owns 55% of the company. The remaining 5% is owned by the Belgian government.
However, Deutsche Bahn, the German state railway, its Italian counterpart and specialist infrastructure funds have also been named as possible buyers.
Deutsche Bahn has expressed interest before but has since announced plans to launch a rival passenger service through the Channel Tunnel.
A precise valuation of Eurostar, which is part of a consortium bidding to run the East Coast mainline, is uncertain. It made a profit of £52m in 2012, and has annual revenues of about £500m.
In October, it reported its best quarterly performance since 2008, carrying 2.7m passengers during the three months to September.
The banks' fee proposals are likely to play an important role in determining whether they get selected to advise the Government.
City firms involved in last autumn's sale of Lloyds Banking Group shares agreed to waive their fees from the Government, while those which led the privatisation of Royal Mail did so at a steep discount to their usual rates.