Although Railtrack did not raise the billions anticipated by the
Government, things might have been a lot worse but for some sound PR work, says David Wynne-Morgan, director of WMC Communications
Railtrack, seen as one of the most difficult of the privatisation sells,
was a mammoth success. True, it only raised pounds 1.9 billion instead
of the pounds 2.5 billion the Government had hoped for, but it attracted
applications from nearly 2 million private investors, of whom nearly
600,000 got share allocations, while the shares available to
international institutions were over subscribed 14 times.
Was this due to the brilliantly innovative marketing campaign of the
Govenrment, the new company and its advisers? I’m afraid not. Is this
latest triumph going to widen and deepen the long-term desire for share
ownership? Again I’m afraid that is not the case.
The Railtrack privatisation success was living proof that if you price
something cheaply enough, it will sell. What other share could you
purchase that would virtually guarantee you a 25 per cent return in the
first year with a a discount on sales price and a guaranteed 18 per cent
divident at the end of February next year?
Equally ten per cent of the lucky 600,000 who got shares had sold them
and taken their profit at the end of the first day and I suspect a lot
more will do so after getting their dividend at the end of February.
Dewe Rogerson, the great Government privatisation specialists, did their
usual competent job. They are not in the risk business. They have the
lion’s share of the Government’s privatisations. They are not a low
risk, but a no risk decision for any Government civil servant. Their job
is to ensure the privatisation gets away and is seen to be successful,
and it is largely a matter of price. They have never failed. I suspect
that as long as they exist and as long as privatisation continues, Dewe
Rogerson will be the leaders.
The marketing campaign was in fact extremely low-key. However, it got
off to a bad start. It became a political football with Labour, both new
and old, attacking the whole concept on every possible occasion.
There is no doubt that Phillip Dewhurst, the director of public affairs
and perhaps even more Roger Shire, the veteran head of media relations,
did a supremely professional job for Railtrack. What they did was to win
back credibility for the company. Had they not done so, I believe they
may have had to price the shares even lower.
All the advisers concerned involved with the media did a good, if safe,
job. By the time the offering took place, all applicants were guaranteed
a profit, and for those who were interested in the long term, the
communicators had won a new respect for the Railtrack management.