LONDON — Leading fund managers in London say the government’s decision to shut down Railtrack, the rail infrastructure company, has jeopardized chances of attracting big private investment for future transport projects, reports a wire service.
In an open letter published Wednesday in The Times, more than 20 of London’s top fund managers said the way Railtrack was placed into administration in October had seriously damaged the government’s relationship with business.
Transport Secretary Stephen Byers pulled the plug on Railtrack on Oct. 7 after rejecting the company’s latest request for more public money.
Railtrack shareholders, who lost their entire investments, have joined forces with the Railtrack Group, the surviving management company, to consider suing Byers and the Transport Department.
The managers who signed the letter included Hermes Investment Management, Henderson Global Investors, Merrill Lynch Investment Managers and Investec Asset Management. All are institutional investors in Railtrack.
The fund managers said investors considering becoming involved in part privatized projects would need to negotiate improved terms in future deals, including the level of interest payable on loans.
“We … wish to register our concern that the placing of the company into administration was carried out with undue haste and without appropriate consultation with the shareholders,” the letter said.
“Our greater concern is that the government’s actions have now caused considerable damage to the relationship between the government and the whole of the business sector.”
Byers has said private companies will contribute 34 billion pounds ( $48 billion) over the next decade but the Strategic Rail Authority has suggested there is a shortfall of at least 8 billion pounds ( $11.4 billion).
The newly appointed head of the Railtrack Group, Geoffrey Howe, said Tuesday that shareholders would sue the government if they cannot reach an agreement on compensation.