Royal Mail sell-off advisers allocated millions of shares

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Royal Mail is worth £5.7bn, meaning shares are still worth buying even though they are now worth 61 per cent more than the Government's float price, stockbroker Panmure Gordon said yesterday.

Panmure was the only stockbroker to speak out before Royal Mail shares started trading, saying they were worth much more than the Government's 330p price tag. That angered the Business Secretary Vince Cable so much that he described it as an "outlier", adding: "They are way outside the estimate of most analysts."

Now Gert Zonneveld, co-head of research at Panmure, says of Royal Mail shares: "Now that the dust has settled we have been able to carry out a more thorough review. Despite the strong share price performance since listing, we believe there is still meaningful upside potential on a 12-month view and beyond."

The broker rates the shares a buy despite their value yesterday rising another 26p to 555p, and expects them to hit 570p in a year's time.

It has already emerged that JPMorgan bankers told ministers ahead of the privatisation that they could sell the 500-year-old postal business for £10bn, about two and a half times more than the taxpayer received for it.

That valuation saw Billy Hayes, the leader of the Communication Workers Union, claiming a "conspiracy against the taxpayer" and demanding Mr Cable's sacking.