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.