MPs To Probe 'Underpriced' Royal Mail Sale

Written By Unknown on Selasa, 15 Oktober 2013 | 11.46

By Mark Kleinman, City Editor

A panel of MPs is poised to extend a probe into the privatisation of Royal Mail by summoning the City bankers who advised ministers on the sell-off to give evidence.

Sky News has learnt that some members of the Business, Innovation and Skills Select Committee (BIS) want to interview executives from the syndicate of banks responsible for pricing the initial public offering (IPO) at 330p-per-share.

Following a 38% jump on Friday, the postal operator's shares closed up 4% on Monday, valuing the company at 475p-a-share, or £4.75bn - almost £1.5bn more than the level at which the Government decided to privatise it.

Conditional trading in Royal Mail shares has now concluded, with thousands of private investors likely to offload their holdings of 227 shares each when full trading begins on Tuesday.

Some City analysts believe the company's share price will continue its upward momentum in the coming days because of the scale of demand to hold the stock from institutional investors who saw their orders scaled back or rejected altogether by the Government's advisers.

Vince Cable, the Business Secretary, dismissed the initial price surge as "froth".

He told the BIS Committee ahead of the flotation last week that he was convinced the sale had been properly priced.

Adrian Bailey, the Labour MP who chairs the committee, said the appetite of its Conservative members for a full inquiry into the privatisation had yet to be established.

But he added: "I don't think we can let the matter rest.

"It seems that the Government has given its advisers a lot of money for depriving the taxpayer of £750m of value."

Another committee member said it would be important to interview the bankers on the deal to establish the precise methodology for valuing the company.

The National Audit Office is also expected to examine the sale, on which the Government was advised by Lazard, one of the City's top independent investment banks.

The bookrunners – the banks which helped to place the shares with investors – were Barclays, Bank of America Merrill Lynch, Goldman Sachs and UBS, who are each expected to take fees amounting to several million pounds.

On Saturday, the Financial Times reported that the Government had examined whether it could raise the price at which shares in Royal Mail were sold but that institutions threatened to withdraw if ministers attempted to do so.

Royal Mail and BIS declined to comment.


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