Further report from Reuters
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LONDON (Reuters) - Chiltern Railways could be auctioned as soon as
late August by fund manager Henderson , with bids expected to exceed
80 million pounds, industry sources said on Friday.

One of the sources said bids could approach 100 million pounds,
adding, "It should happen in early autumn -- around late August or
early September."

Another source said on Thursday that Henderson had appointed KPMG as
advisers for a sale of the train operator, so that its project manager
division, John Laing, can focus on its core infrastructure activities.
This source later said Chiltern could be worth around 80 million
pounds.

Chiltern Railways has a franchise to run services northwest from
London towards Birmingham until 2020. It was acquired by Henderson
last year when the fund manager bought John Laing for around 950
million pounds.

"It's an easier business to manage than most, as one company runs the
line end to end, and the assets are in very good nick (condition),"
said one of the sources.

Chiltern is seeking significant compensation after a tunnel collapsed
on its line during the construction overhead of a new Tesco store at
Gerrards Cross near London.

The source said Henderson would not have started the sale process
without reaching an agreement with Tesco.

POSSIBLE BIDDERS

Another of the sources, referring to bus and rail operator Go-Ahead
Group , said, "Go-Ahead would not rule out looking at this fairly
closely."

Analyst Joe Thomas at Investec said, "Go-Ahead is the most undergeared
stock in the sector, and they have a stack of cash, but you shouldn't
rule out infrastructure funds being interested too."

Go Ahead shares rose 1.4 percent to 27.37 pounds by 1:56 p.m. British
Time.

National Express Group is also seen by analysts as a possible bidder,
having last month missed out on a bid to run East Midland rail routes.

Other possible bidders for Chiltern include Britain's Stagecoach Group
and Arriva , Germany's Deutsche Bahn and French bus and rail operator
Keolis.

Laing's joint venture with Hong Kong-based MTR 0066.HK, running the
London Overground system from November, may also be sold, said one of
the sources.

MTR/Laing last month won a competition to run London Overground --
taking over from Silverlink Metro on a route that combines the North
London Line and the soon to be modernised East London tube line.

KPMG, Henderson, MTR and Go-Ahead all declined to comment.
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