Royal Mail shares: Higher price 'threatened daily delivery'

[TrueBlueTerrier]

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Cable defends pricing of Royal Mail shares as postal service prepares to enter FTSE 100

VINCE CABLE has defended the valuation of Royal Mail, claiming that daily postal deliveries would have been put at risk if the price had been set any higher.

Shares in Royal Mail opened at 591p this morning, up 79 per cent on their launch price of 330p.

Opponents of the privatisation have claimed that shares were underpriced in order to stoke public interest in the sell-off, but the Business Secretary has dismissed the allegation.

“As the Cabinet minister ultimately responsible for the sale I believe it was right and successful,” Cable told the Daily Mail. “But I recognise the need to answer the critics.

He told the paper that shares were priced to appeal to “a core of high-quality investors who would be there in good times and bad, interested in Royal Mail and the universal service it provides for consumers over the long term.”

“We were told if we sought a higher price, these investors would have walked away, leaving the company exposed to short term hedge funds with different objectives,” he said.

Cable’s comments come as Royal Mail looks set to join the FTSE 100 listing of Britain’s leading shares.

“With a market value of £5.97bn, it is certain to enter the FTSE 100,” the Guardian reports. “Its promotion will also fuel demand for the shares from index tracking funds.”

[aposter]

If it smells like it then it usually is it

[pinstripe]

“We were told if we sought a higher price, these investors would have walked away, leaving the company exposed to short term hedge funds with different objectives,” he said.

2 things.

1. Or you could have left it alone.

2. I take it that these nasty, horrid, evil 'short term hedge funds' don't have any friends in the Tory Party. Now, I am really surprised at that.