Official Royal Mail valuation more than £1bn too low

[fishtank]

http://www.theguardian.com/uk-news/2013 ... um=twitter" onclick="window.open(this.href);return false;

Government valuation of £2.6bn-£3.3bn significantly undervalues service, says head of stockbroker Panmure Gordon



The government has undervalued Royal Mail by more than £1bn, a leading City analyst has warned.

Gert Zonneveld, managing director of stockbroker Panmure Gordon, said he is "convinced" the government's official valuation of Royal Mail at £2.6bn-£3.3bn significantly undervalues the 497-year-old postal service. Zonneveld believes Royal Mail is worth £3.7bn-£4.5bn.

It comes as Labour launches a fresh attack on the government for potentially undervaluing £1.5bn of Royal Mail's property assets.

Zonneveld expects the shares to soar by more than 30% on their flotation on the stockmarket on 11 October, in the biggest privatisation since John Major sold off the railways in the 1990s.

"I'm so convinced they [the government] got it wrong," Zonneveld said. "I think they're more than £1bn too low."

He predicted the controversial flotation would be "a raging success" with the shares expected to soar by as much as 30% on their first day's trading as banks and other financial institutions scramble to snap up the "exceptionally" cheap shares.

"I think this [Royal Mail's flotation] is going to be massively oversubscribed," Zonneveld said. "Institutional investors who want £10m will increase their order to £50m."

Hedge funds are also clambering to buy up shares, according to financial pundit David Buik. He tweeted: "I am hearing that a few hedge funds have subscribed for 100s of millions of shares in Royal Mail IPO!"

The massive demand for shares means Royal Mail's stock will almost certainly be priced at the top end of the 260-330p-a-share price range, giving the company a market value of £3.3bn.

The strong demand means the public may not get all of the shares they have applied for. Zonneveld said he expected retail investors will have their applications scaled back alongside institutional investors. It means an investor who has applied for £2,000 worth may end up with only £1,000 worth of shares.

Retail investors have been allocated 30% of the shares on offer, with 70% going to banks and institutional investors. Orders for shares close on 8 October.

The government is selling up to 62% of Royal Mail, with 10% given away to the company's 150,000 staff.

Stockbroker ETX Capital said it was experiencing exceptional demand from retail investors, and expected the shares to rise to 337-365p on the first day.

Broker Hargreaves Lansdown said it would stay open all weekend and until midnight on Tuesday to cope with the phenomenal public demand for the shares.

The shares will be listed on the stock exchange on 11 October, when banks will be able to start trading. Retail investors will not be able to sell their shares until 15 October.

Chuka Umunna, Labour's shadow business secretary, on Friday accused the government of selling Royal Mail on the cheap without considering the value of its network of prime property assets.

"Royal Mail has a huge property portfolio in prime development sites in London and across Britain and there is nothing to stop the privatised company making a quick buck by flogging off these assets for development," he said.

"At a time when hardworking people are suffering from a cost of living crisis, David Cameron reveals how out of touch he is, prioritising the fire sale of this cherished national institution to fill the hole left by his failed economic plan."

The Royal Mail sale prospectus lists three London sites as being "surplus" – an eight-acre site at Mount Pleasant in Islington, London, which Labour said could be sold for up to £1bn to luxury property developers; its Nine Elms site in South London – valued at up to £500m; and a site at Paddington.

In its sale prospectus Royal Mail estimated the value of its estate, which includes more than 2,000 properties across the country, at just £787m.

[ronpetetrevchris]

can we have a chukka f**k off smilie please, im sick of hearing what that spineless tosser has to say!

[UnhappyGremlin]

can we have a chukka f**k off smilie please, im sick of hearing what that spineless tosser has to say!

He does seem to be bleating a lot about how wrong it is.
But still refusing to take any real action.

[Shambles]

He's the Undertaker

[baldrick]

The Royal Mail sale prospectus lists three London sites as being "surplus" – an eight-acre site at Mount Pleasant in Islington, London, which Labour said could be sold for up to £1bn to luxury property developers; its Nine Elms site in South London – valued at up to £500m; and a site at Paddington.

The Paddington and Nine Elms sites are already vacant, but this sounds ominous for the staff at Mount Pleasant.

[PhilthyPhil]

That isn't the whole Mount Pleasant site, the plan is to downsize it rather than close completely

[baldrick]

That isn't the whole Mount Pleasant site, the plan is to downsize it rather than close completely

At the moment the plan is to sell off the Lorry parking space North and West of the mc buildings, and the staff car parking space to the South of the buildings. But it doesn't mean that the actual buildings won't also be sold off after privatisation.
I didn't see any provision for lorry and van parking in the plans for the proposed redevelopment held by the council earlier this year. I don't see how a mc can operate without somewhere to park the vehicles based there, let alone vehicles which are coming to pick up or drop off from other offices.

[aposter]

Knew I should have re-mortgaged 30% I would have been able to retire.

[Shambles]

Am I being cynical in believing that it was devalued for a reason?

[UnhappyGremlin]

Am I being cynical in believing that it was devalued for a reason?

Maybe so that certain parties can benefit almost immediately?

No. That wouldn't happen.................surely?

[Shambles]

Am I being cynical in believing that it was devalued for a reason?

Maybe so that certain parties can benefit almost immediately?

No. That wouldn't happen.................surely?

Nah....gosh, that would make them high class criminals, maybe?