UK to review privatisation methods after Royal Mail pricing row
LONDON, July 9
LONDON, July 9 (Reuters) - Britain launched a review on Wednesday into the way that government assets are sold to private investors, following a political row over whether it sold the Royal Mail postal service too cheaply last year.
The price of Royal Mail shares soared by as much as 87 percent shortly after the government sold off a 60 percent stake in the company in October 2013, drawing heavy criticism from opposition politicians, trade unions and auditors.
Britain has earmarked 20 billion pounds worth of public assets to be sold off over the next six years to reduce the country's national debt.
Business Secretary Vince Cable said the review would look specifically at ways in which Initial Public Offerings (IPOs)- the government's preferred method of selling shares to investors - can be improved, and whether alternatives would be more suitable for future sales.
Among those assets slated for futures sales are the remaining stakes in banks Lloyds and Royal Bank of Scotland, the rest of Royal Mail, and the government's 40 percent stake in the Eurostar rail link.
The review will be led by Paul Myners, a former government minister, and will focus on the whether the government could improve the way in which it gathers information about investor demand - known as the bookbuilding process. Myners will report his findings later this year.
Such a review was one of the recommendations of a critical report into the Royal Mail flotation, published earlier this year by the National Audit Office. It said that taxpayers had been short-changed by at least 750 million pounds as a result of the government's cautious approach to pricing the deal. (Reporting by William James; Editing by Catherine Evans)
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