1.22 During 1991 and 1992 the Armouries, with advice from Schroders, had considered a number of options for involving private finance in the project, including sale and leaseback and a limited partnership. Options, such as the public sector taking an equity share in the project, or a wholly privately funded scheme, were rejected because they were not judged to be sufficiently attractive to the private sector or would have required a change in the legislation governing the Armouries' operations. In February 1993, on the advice of Schroders, the Armouries and the Department chose to seek the new museum on the basis of a straightforward contractual relationship with an up-front contribution of £20 million from the Department.
1.23 We cannot say conclusively whether the Armouries obtained maximum private sector funding, because the Armouries only received one serious proposal for the new museum. Once the joint venture structure was decided, Schroders attempted to market the project to potential providers of private funding. In March 1993 they issued a briefing memorandum to a number of potential investors, including leisure groups and financial institutions. Only two potential bidders showed interest in the project. The Tussauds Group undertook some feasibility work, but withdrew in June 1993 because they were not convinced that private and public objectives for this project could be reconciled and they thought the visitor projections too optimistic. Their own projections were much lower and did not allow for a satisfactory return. The other potential bidder, 3i Group plc, a venture capitalist, was, however, willing to act as lead investor. Discussions continued with 3i Group and in summer 1993 a Chairman and Chief Executive for the project vehicle were appointed.
1.24 Faced with only one bid for the project the Armouries and Department took some comfort from Schroders' opinion in November 1993 that the deal with RAI was the best that could have been achieved in the market at the time, given the project's parameters.