Vince Cable warns share price may plunge despite early jumps

 
Tim Wallace
Follow Tim
IT IS far too soon to judge whether or not the taxpayer lost out in the privatisation of Royal Mail, business secretary Vince Cable said yesterday, arguing that the shares could fall a long way.

He said it could take anywhere from three months to two years to judge the market value of the firm.

The government sold a 60 per cent stake for 330p per share, but the stock jumped 38 per cent on the first day of trading and now stands at 565p.

“I did have a look at some of the equity analysts and what they are saying the price may be a year from now. About half say likely to stay at around the current level and another half envisage a substantial fall,” Cable told the Business Select Committee of MPs. “Some envisage a downside scenario where the price is much lower than the offer price. RBC has a downside scenario of the price collapsing to 50p.”

He said the bankers on the deal would not get a bonus until he has had more time to judge the success of the float.

Related articles