Inside Track: More than one elephant in the Royal Mail sorting room

 
Mark Kleinman
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IT’S NOT hard to identify the biggest of the elephantine threats to Royal Mail’s imminent stock market listing, which heralds the most contentious privatisation since the 1980s.

With unions poised to ballot members over the prospect of industrial action within weeks, the prospect of a multi-day walkout at the precise time that the company’s shares begin trading will instil pricing discipline uppermost in the minds of the bookrunners.

Yet it is not only the prospect of imminent strike action that will concern Moya Greene, its chief executive, as government advisers apply the finishing touches to the listing documents.

Among other, longer-term, threats to Royal Mail is one of which many investors may be entirely unaware: that the company’s ability to set the price of first-class stamps does not exist in perpetuity.

Ofcom, the media regulator, has granted the company a licence to do so until 2019, but a review of the existing regime is scheduled to begin well ahead of that date.

Noises emanating from the Labour conference in Brighton this week suggested that pricing freedom could be a primary target for a Miliband government. It is not only the big energy companies which have reason to fear the arrival of an increasingly left-leaning Labour leader in Downing Street.

Short of the torture of full renationalisation, there are few policy measures that would augur more portentously for a privatised Royal Mail, particularly after its promise to establish a progressive dividend policy attracted a stream of interest from retail investors.

The obvious conclusion? Royal Mail might be as much an electoral issue in 2020 as two years from now.

IN CAMERA ON CAMERA
After months of feuding between Gulf Keystone Petroleum and its bluechip shareholders, all is harmonious again in the Kurdistan-focused oil explorer’s boardroom, right?

So the company would have the City believe, as it prepares its longawaited move from Aim to the main London market. Last week’s trading update referred, optimistically enough, to the “strong board” and “great…future” to which it can now look forward.

That’s not the full picture, though – which for those who have followed the fortunes of Gulf Keystone in recent times might not be entirely surprising.

Last week, the company held its first board meeting since agreeing 55 days earlier to support the election of four new directors nominated by M&G Investments and other leading shareholders. The meeting, in Paris, passed off smoothly, but was curious in at least one respect: Todd Kozel, Gulf Keystone’s lavishly-paid chief executive, insisted that it be filmed by a camera crew.

His request was unusual to say the least, although a source close to Gulf Keystone said it was necessary “because it now has quite a large board”. In fact, there are eleven directors, hardly excessive for a company with a market capitalisation of nearly £2bn.

But perhaps Kozel can become an trail-blazer for a new era of corporate transparency. To dispel lingering concerns about corporate governance at Gulf Keystone, he should post the footage of board meetings on YouTube and allow sceptical shareholders to judge for themselves.

A PORTRAIT OF MODESTY
Gone, but not forgotten. Stephen Hester’s final day as chief executive of Royal Bank of Scotland (RBS) next Monday might not mark the denouement of his presence at the taxpayer-backed lender.

I understand that the departing boss has been sounded out about having his portrait painted by Gareth Reid, the artist whose depiction of RBS’s former chairman, Sir George Mathewson, adorns one of the bank’s many offices.

Surely Hester isn’t too shy to say yes? Mark Kleinman is the City editor at Sky News. Follow on Twitter:

@MarkKleinmanSky