Vince Cable

Royal Mail shares: City broker says shares are undervalued by 80% as investor bonanza and questions for Vince Cable loom

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http://www.independent.co.uk/news/uk/home-news/royal-mail-shares-city-broker-says-shares-are-undervalued-by-80-as-investor-bonanza-and-questions-for-vince-cable-loom-8870740.html

Image of Royal Mail postboxA City stockbroker has said the Royal Mail £3.3billion sell off could have been underpriced by up to 80 per cent.

Canaccord Genuity believe the Royal Mail should be valued at a sum closer to £6billion, or 559p per share, compared to the 330p price per share the Government is expected to charge when trading begins.

Shares were initially priced between 260p and 330p, but were raised to 330p by the Government following strong demand, the BBC has reported.

Business Secretary Vince Cable said approximately 700,000 applications were made by Tuesday night’s deadline, which he believed demonstrated the high level of interest in the controversial privatisation.

Mr Cable faced tough questions from the Business Select Committee over concerns that the company has been undervalued. Committee chairman Adrian Bailey said the Government was overseeing the sale of a profitable, popular, publicly owned company to financial institutions that Mr Cable had criticised in the past.

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Continue ReadingRoyal Mail shares: City broker says shares are undervalued by 80% as investor bonanza and questions for Vince Cable loom

Royal Mail warns thousands will lose jobs after sell-off

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http://www.theguardian.com/uk-news/2013/oct/09/royal-mail-warns-thousands-job-losses

Company spokesman indicates substantial job losses following controversial privatisation of 500-year-old institution

Image of back of postman and post sacks

Royal Mail has warned that thousands of postal workers will lose their jobs following its controversial privatisation. On Tuesday the 500-year-old national institution saw unprecedented demand for its share offer, with more than 1 million people thought to have applied. In its written submission to parliament on Wednesday, Royal Mail said: “The company will employ fewer people in the future, whoever owns it.”

The company refused to state how many jobs will be axed, but a spokesman indicated it would be thousands if not tens of thousands of Royal Mail’s 150,000 employees.

Moya Greene, Royal Mail’s chief executive, who was paid £1.6m last year, has said the company needs to be “sized appropriately for the [declining] traffic we have to process”.

The forthcoming cuts come on top of 50,000 jobs lost over the past decade. The company said it “remains committed to the overarching objective of achieving this without compulsory redundancies”.

“Over the past decade, the postal services sector has changed dramatically. A decline in mail volumes has coincided with the liberalisation of the market and the emergence of competition. In recent years, we have seen a significant increase in the number of parcels being sent. All of this has meant a difficult process of change for our people,” Royal Mail said in its submission to the business, innovation and skills select committee.

“Many of Royal Mail’s employees have seen changes to their working practices as the company has adapted its operations to the changed mix of mail. Change will continue and the company will employ fewer people in the future, whoever owns it.”

Royal Mail workers, who are 96% opposed to the privatisation, continued their campaign against the sell-off with a protest outside parliament ahead of committee meeting. Activists dressed up as highway robbers carried banners saying: “The Great British Royal Mail Robbery”.

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Continue ReadingRoyal Mail warns thousands will lose jobs after sell-off

Royal Mail shares demand outstrips supply

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http://www.theguardian.com/uk-news/2013/oct/08/royal-mail-shares-demand-outstrips-supply

Huge interest among members of the public will hit institutional investors, but hundreds of staff refuse allocation of free shares

Image of post office van next to postbox

Dozens of banks, hedge funds and other institutional investors will be prevented from buying any Royal Mail shares as demand for stakes in the privatisation hugely outstrips supply.

Institutional investors are thought to have ordered more than 10 times the number of shares available, meaning only those that offered to pay the maximum £3.30-a-share will be able to buy any stock – and even then they will not collect anywhere near the amount they requested.

A £3.30 share price values Royal Mail at £3.3bn and will see the government collect £2bn from the 60% of the business being sold. A further 10% is being given to Royal Mail’s 150,000 employees – each will collect shares worth about £2,200.

The original government price range for the shares – set on the advice of investment banks UBS and Goldman Sachs, which collected millions in advisory fees – had been between £2.60-£3.30. If the government had priced the shares at £4 it would have collected an extra £400m for taxpayers.

The amount of shares available to banks will be decreased to ensure the government meets the majority of orders from the public. The 10% of the shares reserved for employees are being distributed for free but it was revealed that 368 staff had refused to take up their allocation.

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The Royal Mail sale is grotesquely illogical

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Guardian source

Image of post office van next to postbox…

“There’s no way we will sell Royal Mail ‘on the cheap,'” promised the government in its “myth-busters” factsheet. Yet this is precisely what it is doing; the valuation is believed by many experts to be on the embarrassingly low side. Experts from Panmure Gordon say that its lower value estimate of £2.6bn could be undervalued by up to £1.9bn pounds, or over 40%. Labour points out that the valuation does not seem to include up to £1bn of property assets – such as the Mount Pleasant or Nine Elms sites in London. Add to this that Royal Mail has an accumulated backlog of tax credits of about £2.8bn, which means that it is expected not to pay any tax for between five and 10 years. And here is the kicker – not only is this government selling the service significantly under any sensible valuation, it is retaining its biggest liability – pensions. Why wouldn’t there be frenzy for its undervalued, no-strings-attached shares?

“But anyone can buy shares,” point out the sale’s proponents. Indeed, provided that “anyone” has between £750 and £10,000 to spare and access to a broker or enough savvy to buy privately. Even then, one would be paying for a tiny amount of shares in something that we all jointly own already and end up not really owning it. The government itself forecasts that seven out of 10 shares will be bought “by big institutions in the City and overseas”. The apotheosis of the cockamamie logic surrounding the sale, is the idea that some of the City institutions set to make a killing may own our pensions. This, apparently, makes everything alright. The state is selling a valuable, profit-making asset, substantially below market value, in the vague hope that some of the corporate entities who buy it may happen to hold your pension.

“Look,” explained James Max on Sky News, “let’s get it off the balance sheet and reduce national debt,” echoing the sentiments of those in support. This is where the rationale of this fire sale really crumbles. Royal Mail is profitable. During the last financial year it showed an operating profit of over £400m. According to the government’s own literature, “the company is on the road to sustained profitability”. It is in a position to make a positive contribution to state coffers. Selling it does not decrease the budget deficit, it increases it.

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Continue ReadingThe Royal Mail sale is grotesquely illogical

Royal Mail being sold off ‘cheap’, says Umunna

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http://www.publicfinance.co.uk/news/2013/10/royal-mail-being-sold-off-cheap-says-umunna/

The government’s plan to privatise the Royal Mail amounts to ‘flogging off a national institution on the cheap’ and could leave taxpayers shortchanged by future asset sales, Labour’s shadow business secretary has warned.

Image of post office van next to postbox

Chuka Umunna said the plan to float the company next week was being conducted in a rush, and called for a full valuation of the firm’s property portfolio should be undertaken to determine the value of any possible land sell offs.

He warned that postal delivery offices in prime development sites could be sold after privatisation, delivering a windfall for private shareholders but no return to the public sector. Steps needed to be taken so that proceeds from any sale could be retuned to taxpayers, he said.

Market analysts have predicted that the sale could value the firm at around £3bn. However, Umunna said two of the company’s London sites – in Nine Elms and Mount Pleasant – alone could be sold for more than £1.5bn.

The share prospectus for the sale of the firm stated these sites had been ‘surplus’, Umunna said and, once privatisation is complete, these and other offices other prime locations could be sold.

He called for ministers to reveal whether an independent valuation of the property portfolio has been undertaken ahead of the sale. They should also set out which of the firm’s sites across Britain have been identified as surplus, and whether any ‘clawback’ mechanisms have been established to allow proceeds to go to the Royal Mail’s pension fund or the Treasury.

It is expected Royal Mail will be listed on the London Stock Exchange on October 11 and will be fully traded the following October 15.

‘David Cameron’s fire sale of Royal Mail is bad for consumers and bad for businesses and there are real fears that taxpayers are going to be considerably short changed,’ Umunna added.
‘Royal Mail has a huge property portfolio in prime development sites in London and across Britain and there is nothing to stop the privatised company making a quick buck by flogging off these assets for development. Ministers need to come clean on which sites are due to be sold and what valuation has taken place.’continues

 

Continue ReadingRoyal Mail being sold off ‘cheap’, says Umunna