The biggest privatisation for some time was always going to be controversial. The Communication Workers Union has consistently opposed it. Politicians, seemingly agreed on enabling the centuries-old business to access the capital markets, have been at daggers drawn over the £3.3 billion price-tag since well before the first day of trading on the London Stock Exchange. And the full implications of both the stake built by The Children’s Investment Fund and the mooted pay and pensions deal with the CWU will not become clear for some time.
Whilst we will need to monitor the Business Select Committee and National Audit Office scrutiny of the flotation process, based on what I know at the moment I would expect the Government’s line, that it followed its bankers’ advice on valuation, to carry the day. There’s nothing wrong with pricing a share offer to sell. And, let’s face it, it would have been pretty disastrous if the Royal Mail IPO had failed.
That would have been bad for the Royal Mail and its employees and, by extension, bad for other businesses using or planning to use our stock markets. It would have threatened an economic recovery only just starting to get off the ground and deprived many, many people, whether they invested directly, or indirectly through a pension fund or insurance product, of a boost at a time when good returns are still hard to come by. And whatever you think of the £3.3 billion IPO valuation, the Government’s 38% stake has risen in line with those of other shareholders – no wonder another offer to the public by the Government before the next election is rumoured to be very much on the cards.