Charities demand to know why they were frozen out of shares

[TrueBlueTerrier]

Charities demand to know why they were frozen out of lucrative Royal Mail flotation

http://www.thisismoney.co.uk/money/mark ... ds-newsxml" onclick="window.open(this.href);return false;

A group of cancer charities, hospitals and universities that missed out on lucrative Royal Mail shares have demanded to know why they were frozen out of the sale.

City bankers and ministers ‘collaborated in the worst possible way making profit for the few,’ a fund manager representing 14 charities claimed after failing to receive a single postal share during last month’s bonanza.

Of the 800 firms that applied for stock, more than 500 were unsuccessful – while hedge funds and overseas investment groups scooped millions of pounds worth of shares. The privatisation – one of the largest since the days of Margaret Thatcher – has been heavily criticised.

In a letter to Vince Cable, and seen by the Mail, Angela Lascelles, managing director of OLIM Investment Managers, asked the business secretary ‘to explain why Goldman Sachs were allowed to give the stock away at the wrong price to the favoured few’.

Her fund, which manages more than £450m of investments, represents a host of charities including North West Cancer Research Fund, the Royal Liverpool and Broadgreen Hospitals and solider groups including the SAS, the Intelligence Services and the Airborne Forces.

The stinging criticism is revealed only days after MPs told Cable he had been ‘conned’ by Wall Street giant Goldman Sachs over the sale.

Shares were sold at 330p last month, only to soar by almost 70 per cent since trading began. Last night they closed flat at 555p. Goldman Sachs advised ministers to sell at the low price – before telling its clients the shares were actually worth 610p each.

In a strongly-worded letter to Cable, Lascelles wrote: ‘Having attended several meetings on the subject, and met the management team of Royal Mail, I asked for £9m of stock in the allocation, which would have been the appropriate holding for our clients.

‘I did not ask for more than we would have held long-term.’

She added: ‘On behalf of our charity clients, named underneath, I would like to have an explanation of the placing arrangements, whereby one hedge fund was allocated just under 6 per cent of the issue, and our charity clients received nothing at all.’

She was referring to the first shareholder to build up a holding of more than 5 per cent, activist hedge fund TCI.

Cable, who described the rise in postal shares as ‘froth’, has been roundly criticised over the privatisation by analysts and politicians alike.

It comes at the end of the week in which Royal Mail posted bumper profits, up 150 per cent from £94m to £233m in six months, after revenues rose by 2 per cent to £4.5bn.

OLIM also holds and manages funds for the Burdett Trust for Nurses, Liverpool University, Nuffield College Oxford, the Royal Academy of Engineering, and other education charities such as the Smallpeice Trust and the Oxford Preservation Trust.

It also manages funds for the Stock Exchange Benevolent Fund and two family foundations.

All of these charities were named in the letter, which was sent on October 24. The Department for Business confirmed Cable had received it, and had replied.

A spokesman said: ‘The Royal Mail Initial Public Offering was heavily oversubscribed, both in terms of the institutional and retail offer. ‘Those institutions not allocated shares are, understandably, disappointed.

‘The focus of our allocation policy was to make sure that Royal Mail was left with a strong and sustainable shareholding base made up of institutions interested in the long term future of Royal Mail.’

[wandle]

whereby one hedge fund was allocated just under 6 per cent of the issue, and our charity clients received nothing at all.’

She was referring to the first shareholder to build up a holding of more than 5 per cent, activist hedge fund TCI.

She manages investment funds, and does not know the difference between being allocated shares, and building up a shareholding by purchasing shares after the company has floated ?

[biscuit1957]

whereby one hedge fund was allocated just under 6 per cent of the issue, and our charity clients received nothing at all.’

She was referring to the first shareholder to build up a holding of more than 5 per cent, activist hedge fund TCI.

She manages investment funds, and does not know the difference between being allocated shares, and building up a shareholding by purchasing shares after the company has floated ?

[Lounge Lizard]

I thought Charity Commission regulations required charities to only hold those funds that might reasonably be used in the short term thus it not being appropriate to invest in shares, but I might be wrong.

[biscuit1957]

If you hold shares normally you keep them to make a profit,a charity is supposed to help at the time,does this mean she wanted them for herself?