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The Great Royal Mail Robbery – Royal Mail shares too cheap

By Chris Dawson October 10, 2013 - 7:54 pm

Great Mail RobberyThe government has undervalued Royal Mail by as much as 80% according to city stock brokers Canaccord Genuity. They reckon that shares in Royal Mail should be valued at £5.59, not the paltry £3.30 which is the price set by the government.

What this means to the tax payer is we’ve lost billions of pounds due to the blunder. What it means to private investors is that they’re almost guaranteed to practically double their money on Tuesday morning when shares start open trading and they can cash in.

That is of course if you got any shares in the first place. Over 700,000 of us applied for shares, but 35,000 people who applied for more than £10,000 worth of shares will miss out entirely and get none. If you applied for up to £10,000 worth of shares you’re still only get £750 worth, so if you were hoping for a bonanza pay day you were probably right, but you’ll only be able to double £750 of your money, not rake in a £10k+ profit.

Institutional investors will also miss out. So strong was demand to snap up Royal Mail shares at a rock bottom price that Robert Peston, BBC business editor, estimates that they made offers of around £27 billion (there’s only about £1.7 billion worth of shares to go round, so the price was attractive enough to have sold Royal Mail 16 times over).

Naturally the CWU aren’t too impressed saying Royal Mail has been “flogged on the cheap” and calling it the “The Great Royal Mail Robbery”. They’ll be protesting outside the London Stock Exchange on Friday morning when conditional trading gets underway. Full trading of Royal Mail shares is expected to take place from Tuesday onwards, in the mean time only institutional investors can trade and should the IPO collapse for any reason (doubtful), then the trades will be rolled back.

It’s a bit of a shame really as no one is going to be happy. Those that wanted to make a quick buck on Royal Mail will be peeved that they didn’t get the shares they wanted. Those that didn’t want Royal Mail sold will be berating the government for flogging it too cheaply. Even Investors will be unhappy as unless there’s an old boys network going on they too will miss out on the allocation they bid for.

Doubtless the government will call the sell off a success. It’s hard to agree with them based on demand and especially if share prices do soar once the markets open. Royal Mail would probably have raised more cash for the country if Vince Cable had simply stuck bundles of shares on eBay auctions and let the market determine a fair price.

Any eBay seller could have advised Mr Cable (who is after all, supposed to be the “Business” Secretary), that it’s easy to flog something if you price it too cheap. Just ask anyone that’s mistyped their Buy It Now price and seen their item snapped up in seconds before they could correct the mistake.

  • 4 years ago

    Mandelson tried to sell the RM to a bunch of venture capitalists for much less than the current government.

    If Tamebay is becoming some kind of left wing propaganda machine I am out!

    • 4 years ago

      PMSL – First time I’ve ever been called a lefty :-)

    • 4 years ago

      :D and not the last.

    • 4 years ago

      LOL.

      We’ll be rebranding Tamebay soon as The Morning Star.

      And singing the Red Flag as you read will become compulsory, comrades.

      We’ll also start reporting more closely on tractor production. And it will always be up. So rejoice.

      “Tamebay’s flag is slightly pink,
      And not as red as Whirly thinks.”

    • 4 years ago

      Excellent.

      Can you include a weekly report on turnip production also please.

    • 4 years ago

      Weekly root vegetable yield figures from the Urals will be coming soon, comrade.

      How’s that Russian Language class coming along?

    • Jimbo
      4 years ago

      I think purple would be a better colour for your flag as there is certainly a touch of blue in tamebay brother number 1.

    • Danny
      4 years ago

      Got to point out –
      Mandelson tried to sell 33% of Royal Mail (retaining a public majority stake) and he couldn’t get this proposal through past the Labour members & subsequently MP’s.

      Its such a big shame – The Royal Mail is performing brilliantly and now it’s taken away from us – Handed to the wealthy for peanuts, to be run in the interests of the rich & powerful – The government is behaving like a nightmare hellish depiction of Robin Hood.

    • 4 years ago

      True. He failed though. No appetite for it.

      The bulk of the shares went to insurers and pension funds, long term investment, not a quick buck.

      Small investors got all the shares they asked for, pro investors classed as over £10k got nadda.

      How was it handed to the wealthy?

  • 4 years ago

    Remember its OUR money. When the idiots in the Labour Government gave away the Gold Reserves. Its our money that they were giving away. When the idiots in the Tory Government gave away the Royal Mail for peanuts. It was our money they were giving away. When the idiots in the Tory Government scrapped the Nimrods that had cost some £4 Billion before they went into service(yet claimed that it represented a “Saving” of a few hundred million-yet had cost £4 Billion) It was our money they were wasting.

    When are we going to get any Politicians of any colour or Political Party who are competent to be allowed out with Our Money????

    • 4 years ago

      “When are we going to get any Politicians of any colour or Political Party who are competent to be allowed out with Our Money????”

      When we don’t vote for more of the same stupidity.

      Vote UKIP!

    • JD
      4 years ago

      Vote UKIP – LOL !!!

      That would just be different stupidity.

    • 4 years ago

      :D

    • Danny
      4 years ago

      Where I am – UKIP are Fascist

      Be aware – History has been here before

    • MG
      4 years ago

      All policitians should have to work in industry and actually have to make a profit, from either making or buying a product and then try selling for that profit. Perhaps then they would realise the value and the hard work that is put into earning every pound they waste.

  • 4 years ago

    Whether you lean Tory, Labour, swivel-eyed loon, Cleggover, Gladstonian Liberal, Ultra or Peelite…

    To knowingly sell something too cheap is idiocy.

    We’re all eBayers here….

  • Jeff
    4 years ago

    Criminal – major heads should roll.

  • 4 years ago

    Seriously though, it was a wildly popular and successful sell off, the argument on whether it was sold to cheap will run and run.

    Can we sell the BBC now please.

    • 4 years ago

      I would certainly support the idea of selling off the BBC especially if the Privatized BBC no longer had the right to Tax the viewing public but had to survive commercially like every other Broadcaster.

      After all it can only afford the £1 Billion it spent moving to Salford and the £1 Million payoffs because it receives enormous amount a “Tax” from the rest of us and has no regard for the people who pay them.

  • northumbrian
    4 years ago

    yes were mostly sellers here ?.some have gone to the dark side, or were never proper sellers,
    every seller knows if you dont ask the right price you dont sell?

  • northumbrian
    4 years ago

    and as a seller if any supplier asked the final market sales price they would not sell,

    the real final market price wont really be known until all the hype and tripe dies down,its possible in

    6 months time whe the unions are done royal mail shares may not be worth a carrot

    • northumbrian
      4 years ago

      many of the shares being bought and sold today are probably connected to union bond funds and investment portfolios, like good socialists, lol

    • 4 years ago

      “6 months time when the unions are done royal mail shares may not be worth a carrot”

      Indeed.

      We’ve been subsidizing it for decades, I was more than happy to trouser some of my money finally.

      Does a government really need to own a parcel delivery firm? I don’t believe so.

  • KellyClark
    4 years ago

    Hay, Is it a mail robbery. Oh god, What a shame.

    • Mike T
      4 years ago

      Yep, robbery indeed. We all know you can shift any stock if you underprice.

      At least the Queen has said the “Royal” title goes if the Universal Guarantee goes.

  • Matt
    4 years ago

    Maths help first.

    The undervalation – if we take a single outlying figure from a single source as being worth getting all aeriated about – is 40% not 80%.

    Now, the Royal Mail may be performing well for now, when we have a government in power that is not beholden to Trades Unions.

    How well do you think it will perform when the Union Glovepuppets are back in power, and under the cosh from Len McClusterfuck and his friends?

    It’s a good job that it has gone. Independent services deserve to be independently run.

    It now has a chance to be properly managed by a real management focused on delivery of a service with no political interference.

  • TheShopkeeper
    4 years ago

    Not a day on the stock market yet and the shares are 38% up on the ridiculous 330p Dave & Co thought was at the top end of expectations!!

    How many of Dave’s Eton Tory cronies have made a mint out of this?

    It’s a disgrace.

  • Gary
    4 years ago

    The taxpayer still holds a large stake in Royal Mail. Hasn’t the treasury just made £400m on it’s holding?

    Doesn’t seem too idiotic does it?

    Gordon Brown and his lefties cost the country billions when he sold gold.

    • John H
      4 years ago

      Did we ever have that gold though? Or had we flogged it long ago? We can only guess as there is no official audit of the gold in store. Note the supposed “sell-off” happened after the Germans asked for their gold back from our vaults. All we know is what we have been told – that dollars and Euros were apparently bought with the funds.

  • Cambridge_Blue
    4 years ago

    The cableguy & gideon have done a great job as ever.
    Hopefully Tamebayers will have all filled their boots with shares and will now be banking an early christmas bonus courtesy of the taxpayer.
    Trebles all round in the city!

  • Mary78
    4 years ago

    Renationalise – it would be a popular move.

    I use Royal Mail a lot, I’m dreading the inevitable price hikes.

  • Gerry007
    4 years ago

    .
    For such an over subscribed stock, the 1st day trading seems about right.

    All the big institutions did not get what they wanted.

    Us mere mortals who lash out for a few grands worth, got only £749 worth.

    The silly thing is that a RM worker could have bought up to £10k worth, and received a full allocation.

    The unions IF they had organized it properly could have financed each postal worker £10k outward payments [via their pension funds] and then used the combined allocations of 3030 shares per worker multiplied by 149,625 workers. This would have given them a major share holding & given the unions a big say in where RM goes & how it is run, including the forthcoming asset stripping.
    But they did not get it organized

  • Karen
    4 years ago

    What everybody learned today is that if you sell something of value cheaply, lots of people want in on it.

    Those of us who are professional sellers knew that already.