Vince Cable warns share price may plunge despite early jumps

Tim Wallace
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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.

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