POLITICS

Royal Mail Float: Priority Investors Revealed By Vince Cable

30/04/2014 14:01 BST | Updated 30/04/2014 15:59 BST
Matthew Lloyd via Getty Images
NORTHAMPTON, ENGLAND - DECEMBER 18: A photo illustration of privatisation and shares comments boxes at the Royal Mail's Swan Valley mail centre on December 18, 2013 in Northampton, England. This Friday the 20th is the last day for first class mail for Christmas. This will be the first Christmas since privatisation, Royal Mail is also set to join the FTSE 100 only two months since its debut. (Photo by Matthew Lloyd/Getty Images)

Royal Mail's "priority investors", who were given privileged access to shares in the controversial stock market flotation last October, have finally been revealed by Vince Cable.

The business secretary revealed the names of the 16 shareholders, who were selected by Cable for their "long-term investor potential' and given large allotments, as pressure builds about why the business was priced so low despite demand being 24 times greater than the supply of shares.

The priority shareholders had 22% of the business at the time of its float last October, but 12 of the 16 sold some or all of their shares quickly and, by the end of January, just 12% of Royal Mail's shares were held by the investors.

Cable previously attacked short-term investors like hedge funds as "spivs and gamblers".

The National Audit Office revealed that many of the priority investors sold out their shares swiftly after the flotation, making huge profits within the first few weeks as the Royal Mail's share price soared by 72% over the first five months, after being priced at a "cautious" 330p-a-share.

Margaret Hodge and the public accounts committee are set to quiz the business department and its advisers on the process, as the business' share price increased by 38% on the first day of trading, with the taxpayer estimated to have lost out on £750 million due to its cautious pricing.

Cable cited the "strong interest in who the investors are and speculation around the names", adding: " I have decided the public has an interest in an accurate list being available.”

The list features Kuwait and Abu Dhabi's sovereign wealth funds, numerous hedge funds, including infamous speculator George Soros' Quantum Partners. Another one of the firms, Lansdowne Partners, is run by Peter Davies, who was George Osborne's best man at his wedding, as Ed Miliband highlighted at Prime Ministers' Questions.

Here is the full list, as released by the Business department:

  • Abu Dhabi Investment Authority
  • BlackRock
  • Capital Research
  • Fidelity Worldwide
  • GIC
  • Henderson
  • JP Morgan
  • Kuwait Investment Office
  • Lansdowne Partners
  • Lazard Asset Management
  • Och Ziff
  • Schroders
  • Soros
  • Standard Life
  • Third Point
  • Threadneedle

Labour's shadow business secretary Chuka Umunna said: “Following repeated calls from Labour, and Ed Miliband’s questioning of the Prime Minister today, the government has been forced to publish the list of the ‘priority investors’ given the lion’s share of Royal Mail shares in its botched fire sale. This comes after ministers have dragged their feet for months.

“Vince Cable’s claims to have prioritised long-term investors now lie in tatters, and the City has made a fast buck at taxpayers’ expense. This list includes both Lazard Asset Management, and a hedge fund with links to the Conservative Party.

“The full scale of the mishandling of the sale of Royal Mail by David Cameron’s government is now becoming clear and serious questions for ministers are mounting. Taxpayers have been left hugely short changed at a time when families are being hit by a cost-of-living crisis.”

Cable said these 16 gave ministers the confidence to launch the Royal Mail float and were later given shares.

He said: "I told the BIS Select Committee yesterday I wanted to be as helpful and transparent as possible. In that spirit I had already provided the names to the National Audit Office and yesterday I provided the list in confidence to the chairs of the BIS Select Committee and the Public Accounts Committee. I had been advised that the investors expected confidentiality around their share acquisitions but there has been strong interest in who the investors are and speculation around the names, some of it inaccurate. I have decided the public has an interest in an accurate list being available."