The Post Office float is a disgrace

First the political stance. I never agreed with Coalition Government. As an active Conservative I have little in common with Liberal Democrats. In the last century the Tories were in minority government on three occasions. After each of these they won more seats in the next General Election. So it was a silly decision anyway.

Secondly the reality of having Vince Cable as the Business Secretary is now clear. The flotation of the Royal Mail was totally mishandled:

a) The current share premium of around 40% means a tax payer’s asset has been grossly undersold.

b) The limit of £750 for private investors (while the hedge funds gorge on the carcass) is a disgrace. It makes a mockery of the Business Secretary’s so called entrepreneur’s drive.

c) On page 377 of the Royal Mail prospectus it said that “The minimum application amount is £750 and applications must be for one of the following amounts”. There are then twenty one sums between £750 and £50,000. Amounts over this had to be in multiples of £10,000. The Prospectus said that in the event of an oversubscription the smaller applications would be chosen.

d) But Vince Cable and the Treasury completely miscalculated the response to the offer. It was starring them in the face. The anticipated yield on the offer price was 6.1%. As it is virtually gilt-edged this was a staggering offer.

e) 600 City institutions were denied shares which means an opportunity to prop up the UK pensions industry was also lost.

f) The Post Office workers don’t seem too impressed either. 150,000 staff received free shares now worth £3,000. 15,000 individuals applied for more shares under the ‘employee priority’ scheme. They can’t sell until 2016 but with a 6.1% dividend coming why should they care? They will be able to spend their time on strike planning how to spend their new found wealth. What an example to the UK’s 4.5 million hard working SME owners and managers.

The Post Office float is a massive shambles. I hope that Vince and George enjoy their drinks parties with their bloated advisers.

1 comment for “The Post Office float is a disgrace

  1. Richard Hoblyn ENTERPRISE BRITAIN (what's left of it anyway)
    16 October, 2013 at 08:45

    Tony

    You are 100% right about the mispricing and the farce surrounding small shareholders but you miss one very important point.

    The concept of privatisation put simply is to allow for nationalised industries to be offloaded by UK government so that management can run these businesses in the public domain supposedly more efficiently. One of the criteria is that UK tax payers should be allowed first refusal on the application process alongside LONG only UK institutions. In other words UK tax payers as investors or pension holders should be given priority (Cameron likes to use the word ‘opportunity’) over overseas institutions, hedge funds & non-UK nationals. Royal Mail has stated that 67% of the issue went to institutions and as I understand it there is a high proportion allotted to hedge funds & sovereign funds. If this is the case the net result is that UK tax payers have effectively been defrauded of the proportional value between 330p (the issue price) & the market price.This is a serious abuse of power by UK gov, the banks involved in the issue, a failure of regulation….

    Is it just coincidence that in 1983 when the Post Office hived off British Telecom the partly paid shares were (also) allotted to overseas institutions at preferential allotments over UK tax payers who were allotted 800 in p/p. form? I know this as I was taking orders at the time from US brokers who were given a substantial freebie c/o Kleinwort Benson & others.

    History has a habit of repeating itself. Has any politician considered the implications of effectively handing out £1bn of UK tax payers money to overseas institutions? Presumably these arabs et al, hedge funds will support the UK property market with their ill gotten gains.

    CORRUPTION is rife in UK and I fear Enterprise is now the domain of the super fat cats who control many aspects of our lives.

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