Royal Mail: Pricing of Shares

Lord Elystan-Morgan Excerpts

Tuesday 22nd October 2013 Lords Chamber

[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.

[Lord Elystan-Morgan (CB)]

Presumably those who were invited to advise on the flotation price were not required to pluck a figure out of the air but would have been instructed to arrive at their conclusion on the basis of certain criteria. Will the Minister confirm that that was the case and will he spell out those criteria to the House?

[Lord Popat]

My Lords, as I said, our key objective was to secure value for money and to make sure that this flotation was successful. The nine banks that we appointed set out the criteria and gave us advice as to the value of the shares that we should pitch at. One criterion was to make sure that the future of the Royal Mail continues to be strong. The most important criterion was that institutional investors were able to invest money for the future of the Royal Mail.