Investment banks which gave higher valuations for Royal Mail – including JP Morgan which said it could be worth £10bn – could be hauled in front of MPs to give evidence over whether the UK taxpayer received fair value from the deal.
According to sources quoted in the media, other global investment banks also suggested valuations well above the Government’s selling price, with Citi proposing an upper valuation of £7.3bn and Deutsche Bank recommending a price of up to £6.9bn.
Now the UK’s Business Innovation & Skills Committee is considering getting them all in to give evidence. Ian Murray, a Labour MP and shadow postal affairs minister, said: “Now we have seen a plethora of banks that have given higher valuations, so pursuing why they chose the banks they did is quite a suitable line of inquiry.”
The move comes as Royal Mail’s value rose to £5.7bn – 61% higher than the Government’s float price – with stockbroker Panmure Gordon claiming it was still worth an investment.
It was the only stockbroker to speak out before Royal Mail shares started trading, saying they were worth much more than the Government’s 330p price tag.
That angered Business Secretary Vince Cable so much that he described it as an “outlier”, adding: “They are way outside the estimate of most analysts.”
Now Panmure Gordon has issued a buy recommendation on Royal Mail, setting a target price of 570p. It said: “Despite the strong share price performance since listing, we believe there is still meaningful upside potential on a 12-month view and beyond.”
The Government is also being probed by the National Audit Office, which is looking into whether the privatisation was under-priced and taxpayers were deceived.
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