US and Canada eye Royal Mail stakes after privatisation

[TrueBlueTerrier]

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Multi-billion dollar American and Canadian pension funds are being lined up to take stakes in Royal Mail when it is privatised, possibly as early as the autumn.

Moya Greene, Royal Mail’s chief executive, revealed that she has given a roadshow presentation to the Ontario Teachers’ Pension Plan as part of the preparation for the £3bn IPO, the biggest privatisation in 20 years. The fund already has £4bn invested in the UK, including stakes in the Channel Tunnel rail link, Birmingham and Bristol airports and ownership of the lottery operator, Camelot.
It is also believed that Ms Greene has spoken to US funds Calpers (the Californian Public Employees’ Retirement System) and Calstrs (the California State Teachers’ Retirement System).

Both are major long-only investment funds.

“We have had soundings with high-quality pension fund and mutual fund investors and the response has been positive,” Ms Greene told The Daily Telegraph.

“The Teachers’ Pension Plan, for example, in Canada, that is a very high-quality investor, no different from our own pension funds.”

A number of British funds have also been approached as cornerstone investors, although Ms Greene did not reveal any names. She said she had not spoken to any sovereign wealth funds from the Middle East or China, but that such funds could make up a “broadly-based” group of investors.

On Tuesday, Royal Mail reported a 61pc surge in pre-tax profits in a set of annual results Ms Greene said “presents a cogent case to investors” for a stockmarket listing.

The state-owned delivery company said pre-tax profits jumped to £324m from £201m last year and a loss of £165m in 2011. Underlying operating profits soared 165pc to £403m, from £152m in 2012.

Although Royal Mail wants to float as early as the autumn, Michael Fallon, the Business Minister, said the Government is “committed to a sale but its structure and timing remain open”.

Britain’s online shopping boom was credited for the Royal Mail’s resurgent results. The parcels division recorded a 13pc rise in annual revenues to £4.5bn. Parcels now account for almost half – 48pc – of group revenues, which jumped 5pc to £9.3bn. Letter revenues rose 3pc on a like-for-like basis, reflecting the sharp rise in stamp prices as well as the radical turnaround driven by Ms Greene.

Ms Greene said Royal Mail was “crawling out of a deep hole” and returning to strength.

“Three years ago, this company was bleeding money, was not profitable and any profits came from the GLS parcels division in Europe,” she said. “Today, fully three-quarters of our profits are coming from the UK.

“There’s still a way to go, but our UK profit margin has gone from 0.5pc last year to 3.5pc this year.”

Some investors have raised the issue of industrial relations within Royal Mail. The CWU communications union is planning to ballot members on strike action to “oppose privatisation”.

Ms Greene said that any strike action would be “foolhardy” but that major funds were used to investing in unionised businesses, such as the national postal services of Germany and Austria.

Asked if there would be a strike, Ms Greene said: “I certainly hope not, nothing will undermine the job security of our people faster than a foolhardy action like that.

“I respect [the union’s] point of view, I just don’t understand what is so good about government ownership.”

Ms Greene denied claims that Royal Mail was profiteering from the steep rise in the price of stamps or that the privatisation would lead to increased prices, an allegation made by the Bow Group think tank.

“The privatised universal postal services like Deutsche Poste and Austrian Post are some of the strongest companies that provide universal services in the world.

“Some of the government-owned companies have the highest prices, such as the Italian post and the Swedish post [services]. These are companies that have very high prices.”

Royal Mail growth was being driven by the parcels business where customers were choosing the business because of reliability as well as new technology, including the website, Ms Greene said.

She added: “Our modernisation programme, one of the largest of its kind in UK industry, is improving our productivity.”
Investment costs were £665m, up from £579m the year before, which included £75m of redundancy payments, down from £129m the year before.

Royal Mail said its delivery and productivity had increased 1.7pc across the core network. The group closed nine mail centres during the year, taking the total reduction to 30pc over the past three years.

Last month, Mr Fallon said the Government would list the company “within the year”. He indicated that the listing was the favoured route but that all other options remained open, including a trade sale. The Department for Business is expected to appoint investment bankers to handle the historic privatisation within weeks.

[hubbahubba]

No doubt feathering her own nest,and those of her "buddies across the pond".
This company is going to be stripped to the bone,and chucked in the bin,just like a KFC barginbox.
F***kers!

[UnhappyGremlin]

No doubt feathering her own nest,and those of her "buddies across the pond".
This company is going to be stripped to the bone,and chucked in the bin,just like a KFC barginbox.
F***kers!

Mentioned this to my boss, only to be met with total denial.