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.'