UBS has been appointed to advise the government on the sale of its 40 per cent stake in Eurostar, the Treasury confirmed yesterday.
The decision is controversial because Swiss bank UBS also worked as book-runners on the Royal Mail deal and was forced to explain claims that the company was undervalued by £1bn at a select committee hearing earlier this year.
Government officials have refused to put a price on the 40 per cent stake before bidders come forward with offers, but rough estimates suggest it could raise hundreds of millions of pounds. Chancellor George Osborne wants the sale to be finalised before the general election next May.
Yesterday, Labour called for the deal to be postponed until Lord Myners’ report into government privatisations is complete. Commenting on the suggestion that another bank should have been appointed, a Treasury spokesperson said: “The Royal Mail sale was different to the sale of the stake in Eurostar. The sale was specifically to ensure that it could access private sector capital and expertise, placing the company in a strong, sustainable position as the provider of the universal postal service.
“The price range set for Royal Mail was based on extensive analysis and market engagement with a range of solid, long-term, high-quality investors. The procurement process for a financial adviser for the Eurostar sale was also competitive and robust, and followed standard government procedures. UBS were appointed having come top in this competition,” he added. UBS is one of the government’s favoured advisers.”
The Eurostar deal is part of a £20bn package designed to raise funds for Treasury coffers, announced in the Autumn Statement last year. Other things the government plans to sell off include the student loan book and Royal Mail pension assets.