Tories - they really care!
To re-iterate a previous post, the lead manager of the bid for the houses was the Principal Finance unit of Nomura Securities. This outfit had a very high profile in the late 90s, specialising in buying up assets that produced a reliable cash flow - 3,000 pubs for example. The chief was a bloke called Guy Hands.
Generally, their ventures worked like this - you negotiate a price with the owner, keeping it as low as you can. You cough up part of the financing from your own resources (say 20%). Then you cut up that price into bonds guaranteed on the cash flow and sell them on the stock market to raise the rest of the money and pony up. (This is called "securitisation".) You now have a) the assets. b) the debt. c) the cashflow. (for example the rent) Clearly, part of the cash is written down to paying the interest coupon on the bonds. You can effectively forget about it. The rest, obviously, you pocket. This is where the clever bit comes in.
The clever bit is this - you think of a way to sell the assets for more than you bought them for. (for example, you sell some of the houses every year) Crucially, although you only have to repay the sum that you borrowed , you get the whole wad when you sell up. (NB the interest and repayments on the bonds were paid from the cashflow of those assets - the rent) So, even if the value of the assets hasn't gone up that far, you get the selling price minus the proportion of the bill you paid for yourself, rather than funding from those bonds - that is to say a killing. (This is called "leverage" - if you paid 20% out of your firm's money and securitised the rest, and the assets rose in value by 15%, you get a 95% profit - even assuming every penny of income from the asset went to paying the interest on the bonds. It is usually horribly risky as it works in the opposite sense as well, but in this case you are fairly safe due to the guaranteed cashflow, covering your repayments, and the asset backing, covering your own investment and guaranteeing those bonds doubly.)
Clever, eh? Well Mr. Hands was indeed clever - Oxford double first and a McKinsey's management consultant, they don't tend to be thick. And if that career path sounds familiar it's because it is. Hands followed it at the same time as William Hague, and was such a good friend that he could advise foetus boy to "forget about the leadership and spend the next five years f*cking your brains out with Ffyon." In '96, of course, Hague was in the cabinet. Funny that.