No apologies and 'no regrets' over Royal Mail, says Vince Cable

The business secretary again rejects claims the government sold Royal Mail too cheaply despite shares rising 90%.

by Elizabeth Anderson
Last Updated: 18 May 2015

Vince Cable told MPs there will be 'absolutely no apology' over the privatisation of Royal Mail depsite claims that the government significantly undervalued the company, costing taxpayers £750m.

Since the Royal Mail went public in October with an initial price of 330p, its shares have soared to highs of 90%, and currently stand at around 526p (up 59%).

Questioned by the House of Commons Business Committee over whether the government could have achieved better value for money in the sale, the business secretary said the initial 330p price was the best on offer and the surge on the first day of trading was 'froth and speculation.'

Royal Mail shares rose 38% to 455p when the company listed on October 1. Since then they soared to as high as 619p a share in January but have since fallen back and are currently trading at around 526p.

The National Audit Office, the government's public spending watchdog, said earlier this month that the Royal Mail privatisation had left taxpayers short-changed by £750m because the government was too cautious in its pricing of the 360-year-old business.

There has also been some controversy around the 16 'priority investors' picked by Goldman Sachs and UBS, the Royal Mail's listing co-ordinators. Six of those institutions sold all of their shares within weeks of the IPO making huge profits from the surge in the share price.

But Cable told MPs yesterday that Royal Mail was 'still a fragile company with a volatile share price'.
'Hindsight is a wonderful thing, but on the basis of the facts we had, the information we had, the knowledge we had of the company, this was a successful transaction,' Cable said. 'We don't apologise for it, and we don't regret it.'

Cable added that in future the government may look at different ways to sell off public assets, such as sealed-bid auctions and trade sales.

He was backed by business minister Michael Fallon, who insisted that there was 'no evidence that people would have paid more than 330p' a share.

Britain's financial regulator, the Financial Conduct Authority, said on Monday there were no grounds for an investigation into the Royal Mail sale, rejecting calls from a separate panel of lawmakers for a closer look at the reasons behind the sharp share price rise.

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