Royal Mail sell-off advisers allocated millions of shares
Shares allocated to advisory banks have risen in value by £29m since floatation
Banks advising the government on the controversial sell-off of Royal Mail were allocated millions of shares that have shown a profit of about £29m since its flotation. The gains come on top of the near £17m handed over to the banks in fees for their advice on the float.
Ministers have revealed that City advisers helping with the flotation were given the opportunity to buy 13m shares in Royal Mail as investors rushed to buy into the new private company.
Since then, the government has been criticised for potentially short-changing the taxpayer by selling the shares at 330p, when they closed on Friday at a new record of 555p, valuing the company at £5.55bn – 67% up in a fortnight.
Vince Cable, the business secretary, has defended the price of the sell-off, saying value for money is "about more than just the level of proceeds received on day one".
A spokesman for the Department of Business said the government's advisers, including Goldman Sachs, UBS and other junior advisers, were not given preferential treatment when shares were allocated and some did not get any at all.
He refused to say how many shares were offered to each adviser. The spokesman stressed that it is "standard practice", saying there was no possibility of a conflict of interest because of "Chinese walls" between different banking divisions.
However, Adrian Bailey, the chairman of the House of Commons business committee and a Labour MP, late Friday raised questions about the process, saying he plans to grill ministers about how many shares were offered to each bank, their level of fees and their role in the valuation of the company.
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