Royal Mail shares were underpriced at IPO, says Lord Myner
According to a report commissioned by Business Secretary Vince Cable, the government under priced the £2bn sale of Royal Mail by around £180m.
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The report said that shares could have been valued up to 30p more than the flotation price of 330p, following higher than expected demand from banks and individuals.
The report was conducted by former City minister Lord Myners, who stressed the difficulty involved in the share sale pricing process. Speaking to BBC Breakfast, he described Royal Mail's initial public offering as a "complicated transaction".
The inquest was ordered after a National Audit Office review into the IPO of Royal Mail accused the sale of being "rushed" at the expense of value for money.
Shares accounting for 60% of Royal Mail were sold to banks and individuals, a further 10% was given to Royal Mail employees and the remaining 30% stake was retained by the government.
The shares made their debut in October 2013, soaring 38% on their first day and rising later to a peak of 615p per share. The group's current share price now stands at 398p.
In Lord Myner's report, he said : "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.
"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."