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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