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Could Royal Mail have been sold for £10bn?

By Dan Wilson October 25, 2013 - 7:14 am

The Guardian has reported today that JP Morgan valued the Royal Mail at £10bn before it was privatised the week before last.

As it stands, the Royal Mail was sold for just £3.3bn but subsequent trading on the open market suggests that £5bn at least is its fair market value. Of course, in the long run we’ll have a clearer view. But it does seem that the government did sell it off rather too cheaply.

A spokesperson from the Business Department, presided over by LibDem MP Vince Cable, said on Thursday: “The banks’ proposals came months before any threat of strike action by the unions, financial market uncertainty in the United States and other factors which the government has already said were taken into consideration in setting a price for the company in September.”

Who knows what we could have got for it? So it’s good the National Audit Office will be investigating and reporting in the Spring. Not that such a report will help much now that the family silver has been sold. The best we can hope for is a Bullseye style ending: “have a look at what you could’ve won.”

  • 4 years ago

    Hmm. JP valued it at £10 billion. it’s sold for £4 billion.

    Great valuation.

    Can’t imagine why an investment bank would pre hype an IPO.

  • Bryan Griffiths
    4 years ago

    A previous Chancellor, Mr G Brown, sold gold at a price which compared to todays price has cost the UK £18 billion. Probably best if you stay away from political blogging!

    • Pete
      4 years ago

      Is it valid to compare the 1999 gold price with the 2013 price? Oil was $10 pb in 1999, it is now nearly $100 pb . . . . does the same apply?

      But yes – selling gold was a mistake, not turning the oil/gas revenue into a wealth fund was wrong, many of the privatisations were either wrong or under-priced.

  • Gerry007
    4 years ago

    .
    The government still own half of RM, so assuming it was valued at £10bn, and the part that was sold, sold for £4bn, does that not make the whole lot [if sold] has achieved £8bn ??.

    • 4 years ago

      Not really…. most of the bits the country still owns are the loss making bits like the pensions plus a minority but sizeable chunk of shares. Overall we’re onto a loser!

    • Gerry007
      4 years ago

      .
      The government still own 48% of the share capitol, not just the pension funds bit [although that is probably the worse bit of debt].

      The key now is to stop the likes of GIC [now owners a 4.1% stake] from asset stripping.
      Otherwise, it will have been sold at a loss.

  • northumbrian
    4 years ago

    so what , we dont care if it were worth a trillion then sold for a penny ,as long as they they deliver the post , efficiently at a reasonable cost

    • Gerry007
      4 years ago

      .
      Must say I was impressed today when we received an email from a buyer thanking us for a speedy delivery. On this occasion ‘well done RM.

      Posted PPI @ 7pm last night [with late collection driver] and it arrived this morning….

    • Mary
      4 years ago

      Northumbrian, why wouldn’t we care if a UK asset was worth a trillion and sold for a penny? That is over £16,000 for every man, woman and child in the country.

      Surely those of us on here running businesses understand the value of assets, good book keeping and sane business decisions?

      If we care so little, we’ll be robbed blind.

  • Gary
    4 years ago

    The market speaks and JP Morgan have the valuation wrong. RM shares are not £10 which is where they need to be for a market cap of around £10B. They were touting for business and came up with a high figure hopeful that they would get the work. Just like any estate agent valuing a house.

  • Gary
    4 years ago

    Maybe the government should have used ebay to sell Royal Mail?

    The Guardian is a leftie paper anyway. Surprised that capitalists read this. Surely we should be more Times/Telegraph inclined?

    • 4 years ago

      I don’t read the papers too often, but I did read the official government “mythbusters” document which said:

      “How can it be in the taxpayers’ interest to sell Royal Mail quickly and on the cheap?”
      “There’s no way we will sell Royal Mail ‘on the cheap’.”

    • Jimbo
      4 years ago

      The story was also covered by that bastion of left wing propaganda Sky News.

  • northumbrian
    4 years ago

    yeah right!

    JP Morgan has reached a $5.1bn (£3.2bn) settlement with the US Federal Housing Finance Agency (FHFA) over charges it misled mortgage giants Fannie Mae and Freddie Mac during the housing boom.

  • Mike
    4 years ago

    If I recall, when the Indian mobile network was sold off suspiciously cheaply the word “corruption” was flying about in the business media.

    • Jimbo
      4 years ago

      Here we call it “looking after you mates”

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