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Royal Mail undervalued - Financial Times

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October 19
9:17 PM 2013

According to a newspaper report, the UK's Royal Mail was valued by a number of investment banks at 50% higher compared to the public sale price pegged by the government. This only adds fuel to the fiery debate on whether the sale of shares in the postal service was dirt cheap.

The Financial Times reported last Saturday that Royal Mail was pegged by some banks not involved in the sale at GBP5 billion or USD8.09 billion last June. The paper further said that at least two other investment banks offered for the maximum price set, as it quoted anonymous bank sources.

The recently concluded government sale priced 62% of Royal Mail at GBP0.33 per share but prices have increased to GBP0.50 per share since its debut in the London bourse.

There have been accusations leveled at UK Business Secretary Vince Cable of underpricing the said privatization. There was also notice of strike filed by the Royal Mail staff, which Cable said, influenced the pricing of the IPO.

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