Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Gov't decides against selling rest of Royal Mail stake at high

Gov't decides against selling rest of Royal Mail stake at high

Ministers considered selling the government's remaining stake in Royal Mail when the shares were trading close to a post-privatisation peak in March.

According to Sky News, the Department for Business, Innovation and Skills (BIS), headed by Vince Cable, alongside the Shareholder Executive, which oversees state-owned assets, decided to hold fire because of a lock-up agreement. This was established at the time of the company's initial public offering last October and involved the government pledging not to sell any further shares for at least 180 days.

The sale of the remaining 30% stake was discussed in mid-March, when the postal company's shares were trading at around 590p. This means a sale would have generated close to £1.8 billion, equating to a a further £500 million gain for taxpayers.

Sky News highlighted that there was scope for exemptions in the lock-up agreement, if the government had gained the consent of the underwriting banks.By the time the lock-up expired on 13 April, Royal Mail shares had fallen by approximately 20% from their mid-March level to around 490p slumped a further 11%.

A BIS spokesperson explained: 'Ministers receive regular advice on Government shareholdings of which Royal Mail is one. As is standard market practice, government gave a commitment at the time of the IPO not to sell any further shares for 180 days post admission to the [London Stock Exchange] in order to provide the company with greater stability. The Secretary of State was never advised to break this lock-up period.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play French fund CEOs: 'Brexit is a lose-lose situation for all of us'

French fund CEOs: 'Brexit is a lose-lose situation for all of us'

'We'll all lose out - but London is an international city, Paris is not.' Leading French asset management CEOs tell us what they think Brexit will mean for the investment business.

Play Henderson Eurotrust's Stevenson: dealing with European cynicism

Henderson Eurotrust's Stevenson: dealing with European cynicism

Tim Stevenson talks about where he finds his opportunities in the current environment in Europe

Play Mark Barnett - part 2: why I'm not buying Lloyds

Mark Barnett - part 2: why I'm not buying Lloyds

In the second part of our exclusive video interview, Barnett explains why he has no intention of buying Lloyds, and where he sees the greatest income opportunities.

Read More
Wealth Manager on Twitter