Stagecoach boss says the collapse of the franchising programme has heightened concerns among investors about how the railway is financed

Stagecoach chief executive Sir Brian Souter has warned that the rail industry’s multi-billion pound infrastructure upgrade programmes could face a genuine threat from investors’ negative perception of the industry.

Speaking at the Marketforce Future of Rail conference in London this week, Souter said that a key ramification from the suspension of the franchising programme that had been overlooked by government was that it had heightened the City’s concerns over the way the industry is financed and the government’s role.

The issue has been apparent to Stagecoach in its recent conversation with its institutional investors, their low valuation of rail franchises in transport groups’ share price and the risks they perceive from making a return on rail franchises and infrastructure.

“Most of the investors think the railways are a dodo and don’t see any value in them for their companies,” Souter said.

Concerns extend beyond the value of rail franchises and the risks involved in running them to financing Network Rail’s investment programme, he added.

“What we have to do is stop having crises as an industry and get some stability back in,” he said.

Senior industry figures at the conference said that key issues in winning back investor confidence included greater clarity and responsibility for the payback of Network Rail debt and reforms to the distribution of funding and planning responsibilities between public and private sector.


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