Royal Mail sale underpriced by £180m, Myners report says
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Version 0 of 1. A government-commissioned report on the sale of Royal Mail has concluded that £180m more might have been realised from the sale, but broadly backs ministers’ cautious approach to pricing. The report by former city minister Lord Myners says the the sell-off was executed with “considerable professionalism” and the government and taxpayer achieved “significant value”. The government sold 60% of Royal Mail for 330p a share in October 2013, raising nearly £2bn. Myners says it would have been risky to price shares higher than 350p to 360p. Opponents have claimed that the government could have received millions more – possibly up to £1bn – if shares had been priced higher when the controversial privatisation went ahead. Ministers faced criticism after shares increased by 38% on the first day of trading, later peaking at 615p before falling back. MPs have said that taxpayers may have lost up to £1bn in potential proceeds from the sale, but Myners rejects this. He said: “This is a seminal piece of work which has the potential to fundamentally alter the way companies are floated on the UK stock market and I look forward to seeing how this develops. “I regard the Royal Mail privatisation to have been a complex exercise executed with considerable professionalism. Many previous governments attempted to sell but failed. The sale was done against a backdrop of global economic uncertainty and a threat of industrial action, which go a long way towards explaining the cautious approach taken throughout the process. “There were also some inherent complexities built into the transaction, such as a generous retail offer, which added to this caution. The government adopted conventional standard market practices built up over time. “We found no evidence to challenge the general assertion that an IPO price greater than 350-360p could have been achieved and we accept that a decision to revise the range would have come with added uncertainty and risk. The right decisions were made. “We do not believe that a price anywhere near the levels seen in the aftermarket could have been achieved at listing. The aftermarket conditions were extraordinary, unpredictable and did not reflect significant value ‘left on the table’ as some concluded at the time. The government and taxpayer achieved significant value.” The business secretary, Vince Cable, said: “I am very grateful to Lord Myners and his expert panel for this important and insightful report. It contains a number of significant proposals which could make the general process of future sales more transparent. “I would encourage financial regulators and those bringing companies to market to engage in this debate. In particular they should explore how digital auctions could, in certain circumstances, make the sale process much more flexible. “I also welcome his comment that the sale was executed with considerable professionalism and that any decision to try to have priced the shares higher would have been risky. We were right not to take that risk.” |