Royal Mail: Pricing of Shares

Lord Sugar Excerpts

Tuesday 22nd October 2013 Lords Chamber

[Lord Popat]

My Lords, I do not have that information. Our advisers were robustly looked into. Some 21 advisers made a pitch to us. Nine were selected and they advised us at a different stage of the flotation.

[Lord Sugar (Lab)]

My Lords, I assume that the hiring of Lazard, Goldman Sachs and UBS was for their so-called expertise in understanding the correct timing and pricing of the flotation of the Royal Mail. Will the Minister comment on why these so-called experts sold the stock at such a low level and got it totally wrong, to such an extent that the stock rose by 33% the day after and now sits at 54% higher than the issue price? Bearing in mind that other reputable banks had come on record giving a valuation of £5 billion, why were these banks ignored? What will the noble Lord do by way of an inquiry to find out who the lucky institutions were that underwrote this bargain basement sell-off?

[Lord Popat]

My Lords, our key objective has been to secure value for money for the taxpayer and to develop a strong business. The taxpayer still has more than 30% of the shares and the universal service will be secured for a long time. The proposal included an indicative valuation of the company based on many instances and solely on information already in the public domain. Banks made their own assumptions of the Royal Mail’s future performance. Hence we agreed a price of £3.30.