(FORTUNE Magazine) – FOR THE THIRD TIME since Napoleon dreamed of a tunnel under the English Channel in 1802, Britain and France are considering a plan to link their countries by road or rail. But this time there's a difference: the ultimate decision to build what is popularly called the Chunnel will be made in the financial markets of Europe and the U.S. Four competing groups have lined up investment bankers who say they are ready to tap the general investment community. Says Robert Conway, managing director of Goldman Sachs International: ''This is the type of project that captures people's imaginations.'' By February 1, if all goes according to schedule, the British and the French will choose among competing schemes for the project. The governments -- with the help of Schroders, Chase Manhattan, Credit Commercial, and Morgan ) Guaranty -- have narrowed their choices from a field of ten. The simpler and cheaper of the two front-runners comes from the Channel Tunnel Group-France Manche, a British-French consortium backed by several construction companies and seven banks, including National Westminster, Midland, and Credit Lyonnais. The group plans a 23-mile-long tunnel for trains that would carry cars and trucks; it says the project would open six years after the start of work in 1987 and cost no more than $3.3 billion in 1985 dollars. Channel Tunnel projects 1993 revenues of $450 million and says investors would realize a 19% return. Channel Tunnel's main competitor is Euro-Route, sponsored by another four British and French banks, among them Barclays and Banque Paribas, as well as Trafalgar House, a conglomerate, and British Steel. It plans an 11-mile-long highway tunnel with bridge links at either end that would cost $4.3 billion, along with a $2-billion railway tunnel. By 1996, EuroRoute says, revenues would be about $810 million. The company projects returns to investors of 17.2%. The other two competitors are Eurobridge, which would build a $7- billion highway bridge plus rail tunnel, and Channel Expressway, with a $3- billion rail and highway tunnel. Channel Tunnel hopes to raise about $1.5 billion in equity, and EuroRoute is seeking about $2.4 billion; both look to the U.S. for some 15% of the financing. Channel Tunnel has signed on Salomon Brothers to handle the underwriting; EuroRoute has hired Goldman Sachs and Shearson Lehman Brothers. Both groups also have substantial loan commitments from dozens of banks in Europe and the U.S. Investors are waiting to see whether political considerations will shape the returns they may get. The principal advantages of the highway link in the more ambitious EuroRoute plan are that it would create more construction jobs and would not be vulnerable to a strike that could shut down a rail tunnel. The question is whether it could attract enough extra traffic to offset capital costs that are far higher than those of the all-rail Channel Tunnel. ''EuroRoute is likely to generate more traffic,'' says Richard Hannah, an analyst with Phillips & Drew, a London brokerage firm, ''but not necessarily enough to match the return to the Channel Tunnel Group investor.''-