Royal Mail sparks privatisation revamp after taxpayers were left short-changed
The way that the Government sells shares should be overhauled after taxpayers were left short-changed following the Royal Mail privatisation, a government-backed report will today say.
Former City minister Lord Myners was asked to probe the process after accusations that the public missed out on £1billion during the controversial sale.
After being sold at 330p, Royal Mail shares leapt to 455p on the opening day and rose as high as 615p this January. They closed yesterday 3p lower at 394.2p.
Shares shortfall: The way that the Government sells shares should be overhauled after taxpayers were left short-changed following the Royal Mail privatisation, a government-backed report will today say
The process that bankers at investment bank Lazard used to sell the shares, which is common in public offerings, needs to be updated to reflect the rise of digital technology, Myners will say in his report.
He will call for a debate on the way the process, called ‘book building’, is carried out because currently the price cannot be changed after orders for shares have been taken.
Under an electronic auction, one of the models he suggests, the price could continue to rise if there were sufficient demand.
He will conclude that ministers could have sold shares for up to 30p more, which would have raised an extra £180million for taxpayer coffers.
But he will stop short of criticising Lazard or the Shareholder Executive, the government body that handles taxpayer stakes in companies.
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