Could Royal Mail have been sold for £10bn?

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The Guardian has reported today that JP Morgan valued the Royal Mail at £10bn before it was privatised the week before last.

As it stands, the Royal Mail was sold for just £3.3bn but subsequent trading on the open market suggests that £5bn at least is its fair market value. Of course, in the long run we’ll have a clearer view. But it does seem that the government did sell it off rather too cheaply.

A spokesperson from the Business Department, presided over by LibDem MP Vince Cable, said on Thursday: “The banks’ proposals came months before any threat of strike action by the unions, financial market uncertainty in the United States and other factors which the government has already said were taken into consideration in setting a price for the company in September.”

Who knows what we could have got for it? So it’s good the National Audit Office will be investigating and reporting in the Spring. Not that such a report will help much now that the family silver has been sold. The best we can hope for is a Bullseye style ending: “have a look at what you could’ve won.”

16 Responses

  1. Hmm. JP valued it at £10 billion. it’s sold for £4 billion.

    Great valuation.

    Can’t imagine why an investment bank would pre hype an IPO.

  2. A previous Chancellor, Mr G Brown, sold gold at a price which compared to todays price has cost the UK £18 billion. Probably best if you stay away from political blogging!

  3. .
    The government still own half of RM, so assuming it was valued at £10bn, and the part that was sold, sold for £4bn, does that not make the whole lot [if sold] has achieved £8bn ??.

  4. so what , we dont care if it were worth a trillion then sold for a penny ,as long as they they deliver the post , efficiently at a reasonable cost

  5. The market speaks and JP Morgan have the valuation wrong. RM shares are not £10 which is where they need to be for a market cap of around £10B. They were touting for business and came up with a high figure hopeful that they would get the work. Just like any estate agent valuing a house.

  6. Maybe the government should have used ebay to sell Royal Mail?

    The Guardian is a leftie paper anyway. Surprised that capitalists read this. Surely we should be more Times/Telegraph inclined?

  7. yeah right!

    JP Morgan has reached a $5.1bn (£3.2bn) settlement with the US Federal Housing Finance Agency (FHFA) over charges it misled mortgage giants Fannie Mae and Freddie Mac during the housing boom.

  8. If I recall, when the Indian mobile network was sold off suspiciously cheaply the word “corruption” was flying about in the business media.


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