Royal Mail float review to back Cable price view
BUSINESS secretary Vince Cable was right to dismiss calls by some investment banks to value Royal Mail at billions of pounds more than the firm’s eventual float price, the spending watchdog is expected to say this week.
The National Audit Office (NAO) will tomorrow publish the findings of its investigation into the government’s privatisation of the Royal Mail amid continuing debate over whether the postal operator was sold off too cheaply.
The report is expected to say that while mistakes were made in setting of the initial price range for the IPO, revising the price upwards could have put the float at risk and resulted in investors walking away, Sky News reported.
Cable has been under fire since Royal Mail’s flotation in October, which priced the shares at 330p. Shares have soared since and closed at 564p on Friday, valuing the company at £5.6bn.
Four banks that were not appointed to work on the sale told MPs in November that Royal Mail could have been sold off for far more than it was.
However Cable has stuck by the sale price and dismissed these higher valuations as attempts by banks to win work on the deal.