The recent privatisation by the, “Department for Business, Innovation and Skills” of 70% of the Royal Mail proved to be a complete and utter disaster. The UK taxpayer lost £1 Billion on the deal, primarily a result of the share price being set, (by Vince Cable) at the lowest possible permitted level, acting on the advice of Goldman Sachs and UBS.
Privatisation rules contained a clause allowing, (Vince Cable) to increase the initial selling price per share should demand exceed the allocation, maximising the return. Bids for shares exceeded total availability by twenty-four fold but he declined to do so.
Joe Public was also short changed, being allocated only, 8% of the share total. The vast bulk of the allocation, 62% was given over to 21, “Priority Investors” in the believe that they would be in for the long-term. The wide based spread of share ownership would therefore provide stability. This did not happen, shares are now owned by only 6 large consortia.
The first day of the sale ensured a minimum 30% profit on each share. Priority customers, (included Goldman Sachs and UBS) made a killing.
The National Audit Office, (NAO), in a report to Parliament, severely criticised the actions of Mr Cable, querying the involvement of, Goldman Sachs and UBS, providing stock market advice, including recommended selling price per share together with a large allocation of shares.
Resign Mr Cable!!! Not a chance. I see no wrong, said he!! Yet another example of the disease that is Westminster. Scotland is best out of it. Vote, “Yes” in the next referendum.