Royal Mail Privatisation - Business, Innovation and Skills Committee Contents

1  Background

1. On 10 July 2013, following Royal Assent to the Postal Services Act 2011, the Secretary of State for Business, Innovation and Skills announced the Government's decision to privatise Royal Mail through an Initial Public Offering (IPO) on the London Stock Exchange.

2. On 27 September 2013, the Government published the offer for sale of shares in Royal Mail Plc, together with the Prospectus. The Offer Price was set at 330p per share. Conditional dealing began on 11 October and listing of the shares and unconditional dealing started on 15 October 2013. This valued the company at flotation at £3.3 billion.

3. The share price at the close of the first day of trading was 455p, up 124p. Since then the share price has risen to a high of 618p. At the time we considered this Report, the share price was 477p. In the same period, the FTSE rose by around 4%.

4. As this was the most significant privatisation for many years, we decided to monitor the effectiveness of the Department, in terms of the privatisation process and value for money to the taxpayer. We held a series of evidence sessions which followed the performance of both the Department and Royal Mail in the privatisation process. The first was with the Secretary of State, prior to the flotation. We then took evidence from a panel banks, including Lazard, the Government's financial adviser, and UBS and Goldman Sachs, who worked as the Government's Global Coordinators (Glocos). Following that session, we took evidence from the Secretary of State and Michael Fallon MP, the Minister in charge of the privatisation, on 20 November.

5. On 1 April 2014, the National Audit Office published its assessment of the privatisation process. Following publication of that report, we recalled Ministers, the Shareholder Executive and Lazard (the Government's advisors) to discuss the privatisation in light of the NAO's conclusions.[1]

1   National Audit Office, The Privatisation of Royal Mail, HC (2013-14) 1182 Back

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Prepared 11 July 2014