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Prism Rail picked a diamond in disguise

Monday 14 October 1996 18:02 EDT
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Believe it or not, there have been even better performers than Man Utd these past six months. One is Prism Rail, which has seen its share price increase fourfold as the company scoops one BR passenger train franchise after another. These, you will recall, are the very same franchises that appeared so undesirable that hardly anyone wanted to bid for them. Once snapped up by a stock market vehicle like Prism, however, they suddenly seem to acquire great hidden value. Someone, somewhere has got it wrong, and if it is the stock market, then there are going to be some badly burned fingers out there.

In the meantime, the seven founder investors, who have put up pounds 2m of their own money to finance these bids, have been royally rewarded. Even adjusting for the shares going ex-rights when the latest equity raising is complete, they will still be sitting on a pounds 20m profit. Those investors queueing up for the rights the founders have decided not to take up may find they need strong nerves.

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