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Britain hopes it does better selling high-speed rail than it did with the postal service

A security guard of Securail patrols with his dog on a platform at the Eurostar terminal at Brussels Midi/Zuid rail station August 29, 2013. REUTERS/Francois Lenoir (BELGIUM - Tags: CRIME LAW TRANSPORT) - RTX1303V
Reuters/Francois Lenoir
Cheap bidders, keep away.
  • Kabir Chibber
By Kabir Chibber

Journalist

This article is more than 2 years old.

The British government is selling its 40% stake in Eurostar, the high-speed rail service between London and the Continent. Any Quartz readers interested have until Oct. 31 to submit their bids. “The government’s key objective in a potential sale will be to maximize value for money for the UK taxpayer,” it said.

The government will hope the sale goes better than the last time it privatized something.

Shares in the Royal Mail were sold in Oct. 2013 and promptly soared, leading to outcry that the beloved postal service was sold off on the cheap. The UK received £2 billion from the privatization but taxpayers may have lost out on about £1 billion, a committee of MPs said. (The government said that this conclusion was based on  ”factual errors and misunderstandings.”) A review is currently taking place of how Royal Mail was sold. Britain is also having trouble selling its stake in Urenco, the nuclear processing business that it owns with the Netherlands and Germany.

Nevertheless, the UK is going ahead with the Eurostar because it wants to raise money to pay down the public debt. Not that it will make much of an impact—the BBC estimates that the sale of the stake will bring in about £300 million, which won’t do much to cut the £1.4 trillion net debt. But the government wants to send a message this time: one official said that there’s no guarantee the Eurostar stake will actually be sold. “If price isn’t right, any deal is off,” he added. Whoever does buy that stake, Eurostar will still be operated by the state-run French railway SNCF, which owns 55% of the company.

The sale comes at a good time for Eurostar, which is finally profitable, paying dividends, and passed the 10-million passenger mark for the first time last year—only 15 years later than originally projected. It will also have potentially lucrative European routes to itself, after Deustche Bahn was forced to indefinitely delay a direct service between London and Berlin that would have added competition for international train routes to the UK.

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