Top City Fund Manager Backs Royal Mail Sale

[TrueBlueTerrier]

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A leading City investor tells Sky News the threat of industrial unrest at Royal Mail ahead of privatisation is just "union noise".

One of the City's leading fund management executives is backing a £3bn flotation of Royal Mail on the eve of a Government update on plans to privatise the postal operator.

Speaking exclusively to Sky News, Martin Gilbert, chief executive of Aberdeen Asset Management, dismissed talk of industrial action that could disrupt a privatisation of Royal Mail as "union noise" and said he expected institutional investors to take a keen interest in buying shares in the company.

Mr Gilbert is the first prominent fund manager to make public his backing for a flotation of Royal Mail, raising the prospect of Aberdeen becoming a significant blue-chip shareholder in the company if it floats, as expected, in the autumn.

Vince Cable, the Business Secretary, will set out details of the Government’s plans to sell off Royal Mail in a statement to the House of Commons on Wednesday.

Sky News has disclosed that the proposals will include the free distribution of 10% of Royal Mail’s shares to around 150,000 workers.

The giveaway is expected to take place over a period of several years and include restrictions on the timing of share sales by employees.

One source close to the process said that employees may have to hold onto their initial tranche of shares for up to three years, although they suggested that this was partly for tax reasons.

Staff will also be guaranteed a chunk of the retail offering that will allow the public to buy shares in an initial public offering (IPO), which would end centuries of state control of Royal Mail.

Some City fund managers were reported by The Times last month to be boycotting the flotation because of concerns about the company’s history of being hit by industrial action.

Mr Gilbert, who is also a director of BSkyB, the owner of Sky News, said decisions about whether to invest would "depend on value", with Royal Mail expected to have a market capitalisation of between £2.5bn and £3bn if it succeeds with an IPO.

"I think investors will welcome the Government’s decision to IPO Royal Mail, and privatisation of some kind now looks inevitable," he said.

"Whilst there is quite a lot of noise from the unions right now around privatisation, that is only to be expected. The market and potential shareholders will be looking through this noise and will look at Royal Mail based on its business model and its long-term growth prospects.

"Obviously a lot will depend on value but I would expect investors will take a keen interest."

His remarks will deliver a fillip to Mr Cable and Michael Fallon, the Business Minister who has been spearheading the privatisation plans.

Moya Greene, Royal Mail’s chief executive, has held talks with scores of potential investors in recent months in an attempt to persuade them to back the most ambitious UK privatisation for decades.

She has trebled the company’s annual operating profit to more than £400m following a restructuring that saw its historic pension liabilities taken on by the Government.

Trade unions have opposed a three-year pay deal offered by executives, but ministers hope staff will be persuaded by the share giveaway and guaranteed component of the retail offering.

Labour moved on Tuesday to condemn the privatisation despite its own attempt to sell Royal Mail in 2009.

Chuka Umunna, the shadow business secretary, said: "This fire-sale is not in the interests of taxpayers, the consumers and small businesses which rely on the services of Royal Mail every day.

"It puts at risk the historic link between Royal Mail and the Post Office network across the country and could mean delivery offices which are remote and less accessible.

"There are still huge unresolved issues around competition, and ministers have not said how much capital they expect the business will be able to raise after privatisation or how the proceeds of the sale will be used."

Royal Mail and the Department for Business, Innovation and Skills declined to comment.

[UnhappyGremlin]

Trade unions have opposed a three-year pay deal offered by executives, but ministers hope staff will be persuaded by the share giveaway and guaranteed component of the retail offering.

Well, they'll be very disappointed then, won't they?

[pants123]

Top City Fund Manager Backs Royal Mail Sale................ this bloke will do...

another greed all for money bloke... not thinking about the population,, but his own GOD damn back pocket...

a disgrace..

[nataddick]

Mr Gilbert is off his trolley - he is keen to invest in a company that is about to embark on a major industrial dispute with the workers recognised union - the CWU. His rival investors seem to be of the view that RM may prove to be a good investment but they need to sort out their issues with the workforce first and then they will take a look at investing - very wise in my view. Other interested investors who are predatory by nature are in no rush to 'buy in' see no reason, other than political, why the Coalition Goverment want a quick sale other than to reduce National debt. Value for money for the taxpayer seems to be on the back burner and the USO is in jeopardy. Let them try to float and see the share price drop like a stone. I am not all bothered about the 'bribe' that will take years to materialise.

[fishtank]

Mr Gilbert is off his trolley.

Gilbert is Chairman of FirstGroup,has been for nearly 27 years in it's various different guises.

Let's see...former nationalised industry,privatised,chopped up,franchised out,uneconomical routes cut and shut down,cherry picking,price hikes,loaded with Government subsidy...he's been there from the start.
He's one of the original privateers and knows exactly how to make money from privatisation.

The company has around £2bn of debt and has just begged it's shareholders for £600 million to bail them out of a hole.

He's stepping down from FirstGroup this summer.

I wonder?

[scoobydo79]

Mr Gilbert=Chancer