Exclusive: Government Eyes Nuclear Sale
The Government is appointing a Wall Street banking giant to advise it on the future of its stake in Urenco, the nuclear processing company, which could spark a £1.5bn plus windfall for taxpayers.
I have learned that Whitehall officials this week rubber-stamped the appointment of Morgan Stanley to examine options for Britain's one-third shareholding in the company.
Urenco, which is headquartered in the UK, is jointly-owned by the Dutch government and two German energy groups, Eon and RWE, both of which have a major presence in the UK domestic energy supply market.
The UK Government has signalled its interest in offloading its shareholding for some time, but Morgan Stanley's recruitment is the clearest indication yet that it is moving towards such an event.
The investment bank will examine the merits of a stock market listing of Urenco as well as an outright sale of the Government's stake to a single buyer, according to people close to the situation.
The future of Urenco is a politically-sensitive topic, particularly given its tripartite ownership and the importance of the technology it possesses.
Its uranium enrichment technology is among the most advanced in the world, and it has a strong future order book, particularly from Europe and Asia.
Urenco recorded a profit of more than £365m in the first half of this year, an increase of more than 50% on the same period in 2011, despite slowing growth in the nuclear market because of the shift in sentiment towards the energy source in Germany and Japan, which is still dealing with the fallout from last year's Fukushima disaster.
Ed Davey, the Energy and Climate Change Secretary, and the Shareholder Executive, which manages the Government's shareholdings in state-owned companies such as Urenco and Royal Mail, will liaise on the future of the nuclear fuel processor ahead of a decision about a sale, insiders say.
Any proposal for a shareholding in Urenco to change hands must be approved by the other investors, according to the agreement between the owners.
The appointment of Morgan Stanley to advise the Government comes at an important time for Britain's nuclear industry, with bids for the crucial Horizon project poised to kickstart the construction of a new generation of nuclear power stations.
Urenco was established in 1971 following the creation of the Treaty of Almelo, which was signed by the governments of Germany, the Netherlands and the UK.
The Treaty enshrines the principles for effective supervision of the company's technology, centrifuge manufacturing and enrichment operations.
A committee comprising representatives of the governments of the three countries exercises this role but has no role in the day-to-day operations of Urenco.
The Dutch government is being advised by Credit Suisse, while Bank of America Merrill Lynch is advising the two German utilities.
Last month, the Financial Times reported that Patrick Upson, a former Urenco executive, was attempting to assemble finance for a bid for the UK and German stakes in the company.
Morgan Stanley declined to comment.