Port, rail sales spearhead new UK sell-offs

LONDON/AMSTERDAM (Reuters) - A clutch of assets the UK is putting up for sale in what could be its biggest post-Thatcher wave of privatizations is attracting strong interest despite a looming general election.

The British channel rail link and Dover, Europe's busiest ferry port, are in the vanguard of Prime Minister Gordon Brown's 16-billion-pound ($25.4 billion) privatization plan, as he aims to halve Britain's budget deficit in 4 years.

The government is also looking at selling the Dartford toll-road crossing the Thames, its student-loan book and its stake in uranium processor Urenco, and is reviving long-running plans to sell Britain's largest bookmaker, the tote.

"There is lots of interest among investors for these assets," said David Abbott, a director in KPMG's corporate finance team.

Overseen by Standard Life Chairman Gerry Grimstone, the plan targets 3 billion pounds from asset sales and 13 billion from selling government property in the next two years, followed by a rolling review of other assets.

Grimstone was a key architect of Conservative Prime Minister Margaret Thatcher's 1980s privatization of firms such as British Telecom, now BT Group Plc.

One big complication is that Brown's Labour party is trailing in the opinion polls, with an election likely in May. But the opposition Conservatives -- the original privatizers -- may take a similar tack, provided good prices are on offer.

Asked about some of the most advanced asset sales, Philip Hammond, a senior Conservative spokesman on finance, told BBC radio recently: "They are certainly all things that we would want to look at selling and I think a very important factor for us will be making sure that we get maximum value."

HIGH-SPEED

When Brown announced the plans in October, critics decried them as poorly timed and likely to cause job losses.

But a pick-up in debt markets and asset values, and the UK's long openness to infrastructure investing, may underpin demand -- although sector-watchers caution proceeds could vary widely, depending on issues such as the regulatory framework.

Potential buyers are already eyeing High Speed 1 (HS1), the railway Eurostar uses from London to the Channel Tunnel.

Eurotunnel Chief Executive Jacques Gounon has said he has identified several investors, including a Goldman Sachs fund, as possible partners in a Eurotunnel bid for HS1.

He values the railway at up to 2 billion pounds -- although that figure could include outlays such as capital expenditure.

Both funds and continental rail operators, such as SNCF and Deutsche Bahn AG, could also be interested.

Citi is advising the Department for Transport (DfT) while UBS is advising HS1 owner London & Continental.

People familiar with the matter say a formal sale process for HS1 could start before "purdah" -- a pre-election period lasting several weeks when politically contentious statements from government departments are banned.

MONOPOLY

Meanwhile, industry sources say Dover port could fetch up to 500 million pounds and is being advised on a potential sale by Rothschild. It made an operating profit of 15.1 million pounds in 2008 on revenue of 60.8 million.

The port last week formally applied for permission to privatize. It is seeking 400 million pounds to expand, as it anticipates a doubling in freight traffic by 2040.

Dover is one of 50 UK non-profit "trust ports." The government has asked all the ports for privatization plans by April.

A third attractive asset for infrastructure investors, given its natural monopoly, will be Dartford Crossing, a toll bridge crossing the river Thames.

It is running at capacity, carrying more than 50 million vehicles a year, so the government may allow a concessionaire to expand the crossing, although that would need new legislation.

PricewaterhouseCoopers is advising the DfT on the scheme, which returned to public ownership in 2002. People familiar with the matter say PwC will submit a draft proposal by end-February.

Away from infrastructure, a range of other businesses may come up for sale, although in some cases, as with Dartford, acts of parliament would be required.

Most imminently, the sale of betting chain the tote is slated to restart in the summer. Goldman Sachs has previously advised on a possible sale, and private-sector rivals such as Paddy Power Plc and Ladbrokes Plc have said they could be interested.

Also in the frame are the Royal Mint, air-traffic services operator NATS, property owned by British Waterways and the government's oil pipeline system.

A Treasury spokeswoman said it would "not be commercially sensible" to comment on possible valuations, and said more details would come at the Budget, if there was one before the election.

(Editing by Sitaraman Shankar)