Wealth Manager - the site for professional investment managers

Register for full access to Citywire’s Fund Manager database, news and analysis. 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 Investment Pulse: the highs and lows of 2014

Investment Pulse: the highs and lows of 2014

This week's Investment Pulse looks back at some of the biggest stories of the year as well as looking forward to 2015.

Play Inside ETFs: Why the US bull-run still has legs

Inside ETFs: Why the US bull-run still has legs

Global equities suffered a sharp sell-off in the third quarter but exchange traded fund investors are continuing to back the US to outperform in 2015

Play Paul Niven: I won't rip up the Foreign & Colonial Trust history book

Paul Niven: I won't rip up the Foreign & Colonial Trust history book

The newly appointed manager of the Foreign & Colonial trust talks about his plans for UK's oldest investment company.

Your Business: Cover Star Club

Manchester wealth firm hires Coutts director for London launch

Manchester wealth firm hires Coutts director for London launch

Former Coutts director Tony Robinson has joined Chartered Wealth Management to head the company’s newly opened London office.

Wealth Manager on Twitter