The rest is from rent.Under an agreement with John Swift, the rail regulator, Railtrack keeps 75 per cent of any excess profits it makes on property, with the rest going to the train operating companies.However, the prospectus makes clear that the pounds 1bn property proceeds have already been accounted for in setting the level of track access charges paid by train operators. Instead of the second discount, buyers will be able to choose one free share for every 15 they hold up to a maximum of 1,200 shares.The preliminary or “path- finder” prospectus for the sale, published yesterday, makes clear there is unlikely to be the huge property development bonanza once claimed by the Labour Party, which has promised to change the rules to clawback some of the money.The prospectus says Railtrack’s property income for the six years to 31 March 2001 is expected to be pounds 1,000m, of which about pounds 250m is from sales of property. As an incentive to hurry and register, the Government said the lists would be closed soon but did not say when. Other sweeteners, apart from the pounds 69m dividend, include a discount for private investors. They are thought likely to pay about 5 per cent less than City institutions.In addition, there will be a 15p a share discount – up to a maximum of pounds 120 – on the second instalment payment on the shares, which is due in June 1997.

Only those registered get special discounts and bonus shares.The number includes 140,000 private clients automatically registered by the share shops, but even so is well above the level expected in the early stages of the marketing campaign. But the high initial returns could underpin the value of the shares in the stock market.
The signs so far are that the marketing drive is having an impact. SBC Warburg, the investment bank handling the sale, said 910,000 potential investors had registered by last Thursday with share shops run by 110 banks, building societies and other financial companies involved in the sale. City analysts said the Government has structured the pounds 1.8bn sale to give returns in the first year, both from dividends and discounts, above those seen in most previous privatisations, and four or five times as high as a building society.

This does not mean an investment in Railtrack is as safe as building society, because the value of the shares can go up or down. The Government yesterday displayed its determination to make the Railtrack sale a success in the face of threats from the Labour Party to toughen controls on the company. A pounds 69m additional dividend, to be paid in October out of profits made while Railtrack was state owned, is one of a number of sweeteners designed to make the privatisation more attractive. t Substantially all of Railtrack to be sold

pounds 69m additional dividend to be paid in October from
last year’s profitsShares to be paid for in two instalments in May this yearand June 1997Private investors to pay 190 p for first instalment, with the total price to be announced 20 May, including a discount for private investors.pounds 380 minimum investment (for 200 shares) in first instalment5p a share off the second instalment up to maximum pounds 120 discount Alternatively, one free share for every 15 held.. And we all better get on with the job of winning it.”Donald Dewar, Labour’s Chief Whip, said last week’s by-election defeat was “the end of the road”. He added: “I am appealing to Tory MPs with a conscience to leave the Government benches and join the opposition to a government which has totally lost its way.”.