The Government was accused of having “botched” Royal Mail’s £3.3 billion privatisation today as ministers entered 11th-hour crisis talks over how to deal with the huge excess demand for shares.
Business Secretary Vince Cable admitted earlier this week that Royal Mail’s offer was seven times over-subscribed by Tuesday’s midnight deadline, but despite conditional trading set to begin tomorrow morning, the Government has still not decided how to allocate the shares. It had been thought that all small investors who applied would be granted some stock, but now tens of thousands are set to be snubbed. Some sources suggested that any private investors who applied for more than £40,000-worth of shares could be frozen out of the privatisation, whilst others said the cap could be set far lower, at £10,000.
“We will set out the allocation policy by 8am tomorrow morning, that was always our plan,” a spokesman for the Department of Business said. “We will make sure small investors get their fair share. Ministers have had discussions, but there are further discussion to be had.”
However Chuka Umunna, the shadow business secretary, said: “The fact that ministers and officials have ended up in crisis talks less than 24 hours before Royal Mail is listed on the London Stock Exchange shows how chaotic the Government’s Royal Mail fire sale has become. Increasingly it is looking botched. ” The Government will return payments to shareholders who do not get any, or all, of their allocations by 21 October.
Malcolm Hurlston, chairman of the Employee Share Ownership Centre, said it was “an error of judgement” so much has been reserved for international funds and speculators. Sovereign wealth funds from Kuwait and Singapore have ordered millions of pounds worth of shares and the Government ambition to have a diverse investor base means they might become major shareholders as thousands of British investors are snubbed.
