2.20 The equity investment of Metronet shareholders should have ensured that Metronet would monitor risk closely to protect the shareholders' investment as well as their reputations. While Metronet's shareholders had £350 million of equity at risk they were also beneficiaries of contracts under the tied supply chain. This conflict reduced their incentive to tackle problems when they emerged.
2.21 As suppliers, the shareholders would have had to make significant margins just to break even before entry into administration. Our analysis shows that in order to recover their equity investment, shareholders would have had to make gross margins on their contracts ranging between 15 per cent and 82 per cent to break even (Figure 8).