* Quick profits made when share price soared in sell-off
* British government rapped for short-changing taxpayers
* Investors include BlackRock, JP Morgan, Standard Life
(Writes through, adds comments, background)
By Neil Maidment and William James
LONDON, April 30 Major global investors
including BlackRock, JP Morgan, and Standard
Life were drawn into a British political battle on
Wednesday over their profits from a Royal Mail sell-off
criticised for short-changing taxpayers.
Shares in Royal Mail have soared as much as 87 percent above
the 330 pence per share Britain sold a 60 percent stake for in
October. This has offered quick profits for big banks and City
investors and drawn flak from trade unions and the opposition
Labour Party, who say the government botched the deal.
A National Audit Office report this month said taxpayers had
lost out on at least 750 million pounds and the backlash has
been fuelled further by details that many of the government's
targeted long term investors had instead turned a swift profit.
Blackrock, JP Morgan and Standard Life were named in a list
of 16 firms published by Britain as "priority investors", who
were sold larger allocations of shares due to a willingness to
buy sizeable stakes for the long-term, despite Royal Mail facing
the threat of strike action in its peak Christmas period.
The government said some 20 percent of the group were hedge
funds and that it released the list in the public interest.
According to the NAO, almost half of the priority investors
sold their stakes within weeks as the share price rocketed,
while others such as the asset management arm of Lazard,
Britain's independent adviser on the sale of Royal Mail, sold
out completely, raising 8 million pounds for its clients.
Prime Minister David Cameron came under fire in parliament
on Wednesday for the preferential treatment.
"Can the prime minister tell us what assurances, in return
for their golden ticket, those investors gave us that they would
hold the shares for the long term?" Labour leader Ed Miliband
said. Those parties, he added, had made a killing while the
undervalued sale meant taxpayers lost out.
Cameron insisted the sale had been a success.
Facing a parliamentary committee for another grilling on
Wednesday, Lazard, lead bankers from Goldman Sachs and
UBS and government officials said moves to avoid such
a scenario with priority investors could have floored the sale.
"What we had was a set of investors who at the beginning of
this process understood Royal Mail and its issues, and who were
prepared to give us.. confidence that we could have a successful
IPO," Martin Donnelly, Permanent Secretary for the Department
for Business, Innovation and Skills.
"We were trying to build a stable investor base. We did not
seek formal commitments from investors to stay investors because
that would have come at a price, and we did not want put that
price on the taxpayer."
Many had a duty to their investors to sell at a profit if
they felt the price had risen too high," the Public Account
Ministers had hoped to win political capital by completing a
privatisation that three previous administrations had tried and
aborted, but the wrangle over pricing has instead left them
facing accusations of incompetence.
They have insisted its cautious stance on price was required
to avoid a flopped float, and on Tuesday said they had no
apologies to make over the 2 billion pound sale, which saw
Britain end 500 years of state control of Royal Mail.
On Monday, Britain's financial regulator said there were no
grounds for an investigation into the sale, rejecting calls from
lawmakers for a closer look at the reasons behind the sharp
share price rise.
Royal Mail has argued that privatisation opens it up to the
capital it needs to invest in modernising its business.
Its shares closed up at 529.5 pence on Wednesday, 60 percent
above the October offer price.
The priority firms were:
Abu Dhabi Investment Authority
GIC (Singapore sovereign wealth fund)
Kuwait Investment Office
Lazard Asset Management
Soros Fund Management
(Editing by Mark Heinrich)